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Aron Miller

Netflix is of the opinion that the majority of price-related churn will have been seen by this concluding quarter. I happen to agree with them. Because of that I believe that Netflix will be able to accurately characterize the total impact of the price hike and narrow their future forecasts.

The other important figure to watch will be average discs/month which was the initial inspiration behind the price hike. A somewhat poor reaction to the price increase coupled with a further increase in disc usage will be troubling. In the Apr-Jun period, disc usage has historically been the lowest however.

I'm also interested in the relative success of TV advertising. Internet advertising dropped significantly last week (according to Nielsen) which is an interesting puzzle.

Netflix also intended to increase purchasing of DVDs to reduce the delays which I believe customers had increasingly reported. New releases tend to be hot today, not tomorrow. Fulfilling their customer's immediate demand will leave them with more unused merchandise. How are they gonna deal with this?

Netflix's average customer rents 7 movies a month. In three years, will this be 10 movies a month at 30$? Will they be able to financially maintain an "all-you-can-eat" model? Will they ever sell DVDs?

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