Notes from the Neflix Q&A: No Plans to Increase Streaming Price; Focus on Recommendations & Content

Netflix CEO Reed Hastings and CFO David Wells answered investor questions during the quarterly investor Q&A:

• Hastings said that they expected it will still take three years to fully recover from the Qwikster event last year.
• The Olympics did impact subscriber growth in Q3.
• About one third of DVD shipments were new releases, and the majority were catalog titles.
• Tablets are used more for streaming than phones, but TV is where most customers are using streaming.
• Hastings isn't worried about people joining just to watch House of Cards or other shows and quitting. 
• Netflix's main focus is on recommendation and showing people the right 15 or so box shots for titles the customer wants to watch. 
• Netflix will continue to experiment with gesture, voice and other user interfaces.
• Hastings said they were happy with the decision to use Amazon Web Services.
• Original programming will increase content spend by 10% to 20%, but it is an upfront cost. 
• When asked about increasing prices to increase revenue per user, Hastings said that they were "very excited about the $7.99 price point" and see reason to change it. 
• Netflix is seeing engagement with both exclusive and non-exclusive content, but exclusive content costs more and there is more viewing of non-exclusive content.
• Hastings noted that there a number of exclusive options and degrees of exclusives for content.
• Personal stream plans are in the works, and there will be some testing this quarter but no release date has been set.
• Hastings resigned from the Microsoft board because he's on 6 different boards.
• Hastings said that Netflix was using tablets and phones as second screens to help select content instead of displaying information about the directors, etc. 
• Hulu is the closest competitor in the US because of the focus on TV shows and ownership by some of the biggest content providers.
• Netflix will have more Netflix buttons on more smart TV's this season.

Comments

[bigqueue]

>When asked about increasing prices to increase revenue per user, Hastings said that they were "very excited about the $7.99 price point" and see reason to change it.

Sounds like you mean *no* reason to change it.

[Kayla Sonergoran]

This is the confirmation I was waiting to here. Thank you.

[rjm]

About one third of DVD shipments were new releases, and the majority were catalog titles.

Thats EASY when you dont stock new releases !

I QUIT dvds because every new release had VERY LONG WAIT for months after coming out.

[CordCutter]

Missing from Mike's bullet points, NF intends to go after Disney, Universal and Sony pay-tv deals in 2 years when their current deals come up for renewal/cancellation. They said they would of course have to weigh the cost versus the return, but they would be in play for them especially Disney content.

[Perkins Cobb]

"About one third of DVD shipments were new releases, and the majority were catalog titles."

Then why isn't Netflix supporting catalog titles? They continue not to acquire nearly all new catalog releases, or replace titles for which they run out of stock. I know I've harped on this before, but it's not a rhetorical question: why does Netflix neglect this segment of their customer base if it's still a revenue stream worth highlighting in their quarterly reports?

Until Netflix fixes this, I'll continue to root for its demise.

[Tvaddic]

@rjm, Older titles have always been more popular. I read the Netflix book, and they pointed out that 60& of rentals were older. This was because people wanted to get newer releases ASAP, from Blockbuster, back in the day, or Redbox. Un an unrelated note, I could never find a new release in Redbox, which was why I did most of my renting from Blockbuster, before it closed down.

[shthar]

Howbout buying a few more copies of Fuzz or The Death Kiss?

[thisguy]

sounds good

[social media monitoring]

Hastings reiterated that the company does not expect to get back to the highly positive perception it once enjoyed until 2014

[Stroker Ace]

I never wait for a new release, ever. Send one back on Saturday and you'll always get the brand new one Tuesday. Without fail, every single time.

[Galagatron]

The site really needs to revamp its model of completely separating streaming and streaming+disc services. Let streamers be able to see what's available on disc when they search. Heck, just combine the two again.
I'm one of those mostly catalog DVD viewers. That use to be why many of us got into Netflix in the first place: we could rent movies the dominant chain video stores didn't stock on their limited shelf space while carrying about 50 copies of the latest Harry Potter movie or whatever.

[Mike]

Yes, I agree, combining the queues would be a revenue-generating step at almost zero cost to Netflix. So would facilitating the enrollment of new customers in hybrid plans rather than in streaming -only. I can only conclude that Reed Hastings, having predicted the demise of the DVD, is now trying to prove himself right by sabotaging the DVD rental side of the business.

I have found a lot of other sources for movie titles, including GreenCine, Blockbuster, the local public library, Amazon Marketplace, and cable/satellite channels like TV5 Monde, Eurochannel, and TCM. None of these sources offer the catalog or the service that Netflix does. I think that eventually Netflix will fold, with a little help from Hastings, and I will be very sorry to see it happen. I hope Netflix lasts for a long time.

[ice machine]

This design is steller! You certainly know how to keep a reader amused. Between your wit and your videos, I was almost moved to start my own blog (well, almost...HaHa!) Excellent job. I really loved what you had to say, and more than that, how you presented it. Too cool!

[ethan]

ice machine, i love and respect your viewpoints! I was almost moved to create a bot program to go post positive and non-relevant things in response to bots, but then I decided this was easier.

Wowzers!!

[rjejr]

Batten down the hatches Mike, it's going to be another rough few days.

At least we have cable and the weather channel this time. Well at least until the power goes out probably sometime Monday. 98 hours power free after Irene, can't wait.

How widespread do power outages have to be before nf notices a drop in viewership, or does everybody just watch on their smartphones during blackouts?

Keep safe.