July 19, 2016
Netflix has changed the world multiple times over. Whether it be their insanely popular original content or their revolutionary streaming service, this empire of media production has seen millions of people download their app in pursuit of a more comprehensive entertainment experience. And while they have enjoyed unprecedented success in recent years, a chink in their armor is finally visible in the form of dwindling growth numbers. And the fall seems to have been caused by something as simple as a price hike.
The numbers are pretty damning. In Q2, Netflix added only 1.7 million new users, falling short of their 2.5 million prediction at the beginning of the year. This paltry number is significantly lower than last years Q2, when Netflix added a whopping 3.3 million new users in US and international markets. After Netflix released news of these lower numbers, shares dropped 16 percent in after-hours trading on Monday, showing the world that even Netflix isn’t bulletproof.
The decline is likely due to the substantial amount of press Netflix received after hiking prices for old users and new subscribers alike. While they only added $2 to the previous monthly rate, bringing it to a mere $9.99, media outlets scoured the streaming giant on everything from the 5 o’clock news to the Today Show. Pundits and anchors alike took to the airwaves to curse the entertainment company for raising the price of a service we cherish more than clean water. All because we loved the sound of “$8 a month.”
What people don’t understand is that growth, while a hugely important element of startup success, does not make a break a company in a single quarter. With the added revenue, Netflix will be able to substantially contribute to the entertainment world while innovating new entertainment features that will, again, revolutionize the industry. At least, that’s what they’re saying.
“I know it’s not easy on everyone,” said Reed Hastings, CEO of Netflix to the New York Times. “The big picture is very much intact, and we’re very excited about it.”
The big picture in question is likely referring to the entertainment giant Netflix has been creating. The entertainment company is now responsible for a record 54 Emmy nominations, along with growing army of original shows and movies that have made more than one critic jump for joy. The goal isn’t to impress shareholders on a tri-monthly basis; the goal is to change the world of media consumption. And it seems to be working.
“I don’t see why 10, 20 years from now, why every American household isn’t subscribing to Netflix, except for maybe competition,” said Hastings. “So we’ve got to stay on our toes on that basis.”
H / T New York Times
Photo: Flickr / Helge Thomas
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