On Fri, Sep 2, 2011 at 2:00 AM, Wesley McGee <[email protected]> wrote:
> Just thinking... I wonder if Netflix made a strategic blunder by raising > prices *before* they could secure a deal with Starz or another studio or > network. Obviously, part of the reason for the price hikes was to pay for > these content deals so Netflix doesn't become the dumping ground of old but > unnotable films. Now, the premiums want their content to be perceived as > adding value to the brand -- not unlike the premium pricing strategy of > Apple where sales, discounts, coupons and specials *always* exclude things > like the iPhone. Now, if Starz wanted people to affirmatively pay for the > network, and Netflix wanted to keep its service from splintering into > cableco package deals, maybe they could have sold to Starz that they could > market the price increase as the best way to get Starz hit movies online. > Starz gets their premium pricing proposition, and Netflix gets a fallguy to > blame. > > That said, the downside to this would be if the next Starz, like HBO or > Showtime, see it as precedent and ask for similar customer price hikes as > condition for streaming their shows online. > I think it was clear to all players that a new era of pricing for streaming premium content was dawning. I think I posted here my concern that the subscription price for Netflix was going to go way up a day or two *before* they announced their restructuring, based on an article that went over how some big competitors, with much deeper pockets than Netflix (e.g. amazon, google, verizon, att&t) were likely to start competing with Netfllix for the streaming deals, pushing Netflix's costs for content from around $200M to $2B. So, Starz may want to protect its premium brand, but it no doubt also wants to keep its options open, and be available for a bidding war between Netflix and other competitors over the next 12 to 18 months. I think Netflix realized that its profit margin, and potential growth, made streaming its future, not mail-order, and is trying as hard as it can to restructure so it can put as much of its capital as possible in making bids for streaming content. NF does not have nearly as much capital as google or at&t, but what they do have is an existential dependence on streaming content - they are in a position to go all in on these deals, while google may not be willing to overpay as much. They have never really cared about the 8% or so of their customers who might cancel because of the restructuring, because their eye is on a much bigger and more important prize - their continued existence. Netflix has already made the decision that they are not going to become a low-tier backwater provider - they will either be the major online alternative to cable and satellite TV, or they will be out of business soon. -- TV or Not TV .... The Smartest (TV) People! You received this message because you are subscribed to the Google Groups "TV or Not TV" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/tvornottv?hl=en
