Because price matters. Otherwise everybody would use an iPhone and a Mac, but Netflix is not a premium product, it can't win appealing to a sliver of the public, it needs all of it.
This is how the publishing industry killed digital books.
Despite the hosannas of boomers boasting that they saved the physical book, it won't be long until they lose the war. You know change...it looks like it's never going to happen, you laugh at the predictions, and then overnight, it takes hold. Can you say digital photography? Can you say internet connection?
People had been using digital cameras for years, but they were expensive. Just like people were communicating via bulletin boards utilizing low speed modems with arcane software. But non-traditional consumer camera companies, like Panasonic and Sony and Samsung, put out products while Nikon and other high-end manufacturers sat by, as well as the everyman's company Kodak, and then in a year, digital eclipsed film, just like that. Kinda like AOL turned everybody into an internet user, they made it easy.
Now we had a similar situation in the music business, with the iTunes Store. At first the labels considered it a joke, being Mac-only. But then when sales far exceeded expectations and distribution included Windows, suddenly this sideshow was throwing off revenue... And what did the labels want to do? RAISE PRICES!
And who said they couldn't?
STEVE JOBS!
The labels are greedy, short-term thinkers, why else would Universal have stored all those masters in an unprotected facility? The music business was always run on intimidation, but finally it came up against someone who wouldn't play that game, Apple kept prices low until consumers were hooked, then they jumped from 99 cents to $1.29.
99 cents. Ever notice no car is advertised at a round number? How it's always something 99? Even gas! Our minds trick us into thinking $3.249 is equivalent to $3.24. But the truth is it's only a tenth of a cent from $3.25.
And going back to books, did you see that Pearson is going digital first on textbooks? Physical was killing them. They got no revenue on resale. And prices were so high, sales were less frequent.
Instead, they went to the subscription model. That's right, for less than print you get something that can be upgraded on a regular basis, like a streaming music service. Your subscription to Spotify, et al, is not a fixed picture, but a constantly rolling enterprise that adds new titles on a regular basis...and as long as you keep paying ten bucks a month, you can hear them.
Ten bucks. Spotify is a public company under earnings pressure. It could immediately raise prices, but it would start hemorrhaging customers. If it's under ten bucks, it's a throwaway. Once it eclipses that number, you start to think about it. I mean there are months when we barely watch Netflix, but we don't cancel. But if you're counting your pennies, supporting a family, every little bit counts and you look for alternatives that are good enough, like Android and Windows.
There's a huge market in good enough. Not everybody needs to buy Nike or 7 jeans or... They'll settle for the knock-off.
So Netflix is under Wall Street pressure, to pay for all that programming. So it keeps raising prices. Now you think they're going to keep going up FOREVER! You feel the company no longer cares for you, the bond is broken and you start evaluating cash versus benefit.
As for HBO... On one hand, people are accustomed to the $15 price point. But the dirty little secret is that most people don't pay that $15, or don't think they do. The HBO fee is baked into your cable plan, which is a negotiation worse than buying a car. I got so frustrated I told my provider to cancel everything but the internet, and just before the clerk did this, she told me for $9.99 more, I could get essentially all the channels I was getting, including HBO...believe me, I don't think HBO is costing me $15.
Which is why Disney is so brilliantly starting with a low price for its streaming service.
And what Netflix kept doing was adding loads of product while raising the price.
But the truth is most of this product sucks. And it's an experiment, if it doesn't immediately generate an audience, Netflix kills it. That's right the Northern Californians are so into algorithms and spreadsheets that they miss the essence... One or two great shows make up for a slew of crappy ones. Kinda like the CD business!
And I can't say there's been a killer show on Netflix this year. No water cooler moment.
And one thing we're looking for from Netflix is something DIFFERENT! Not only from network, but HBO too. Come on, HBO never would have aired "Babylon Berlin," no way, not enough people would watch it. But if you struggled through the first few episodes on Netflix, you got hooked, I haven't stopped talking about the show and I saw it YEARS AGO!
And it's not like history is unwritten. "Sex and the City" ended and HBO suffered, they needed more hits.
I scan the sites all the time, looking for what to watch. And when I rarely find new Netflix shows, it frustrates me.
And screw the algorithm, showing me what I should be interested in, I have no idea what's actually on Netflix, I read about a movie being available on the service, but it never pops up on my screen. Where's the website where I can scan all the content? Hell, it looks to me like they don't have that much, even though they keep telling everybody they do!
There's too much television for mediocre to survive. Not only are there so many other options on TV, there are non-series/movie distractions only a click away, like YouTube, Instagram, Snapchat...
In other words, Netflix has lost touch with its customers.
Just like the publishing business. Who in hell is gonna buy the digital version if the hardcover is cheaper, or only a dollar or two more? It's a bad value proposition. Kids are down with virtual purchases, as they do in video games, but the oldsters still need to be convinced. Most people who are anti-digital readers never even read that way! But when all books were $9.99 or less... If you bought something and it sucked, no big deal. But when it's $15?
Yup, the book business is just like Netflix. Not aware their business depends on customers. Amazon was growing their business, adding customers and sales. I used to buy a physical book a year, maybe two or three. It just didn't make sense, $25? But with digital, I buy a book every other week if not more often. But I must admit, I think twice about my purchases at these inflated prices, and I'm pissed they're so high when there's no printing and shipping...
You want your customers to LOVE you, otherwise you're the record business. Devastated at the advent of this century. Customers had been ripped-off for so long, they didn't feel bad about stealing, And what did the execs say? Nothing could replace CDs, they were perfect! But the customers didn't feel this way, and they wanted instant accessibility and portability, qualities that are the essence of digital.
And streaming saved the music business.
But sales don't equal the pre-internet heyday, so the streaming services are...waiting to raise prices.
Let's not talk about what something is intrinsically worth... It's only worth what a buyer is willing to pay.
And one thing's for sure, I'm not paying for every streaming video service, no way. I'm gonna end up paying as much as cable and getting less! I'm trying to hold off on Hulu. I don't have the time, and I feel it's an insult.
But, I did pay for Mhz Choice to watch a foreign series, I thought twice, but it was only $7.99 and opened up a world of proven quality television that otherwise I wouldn't have access to.
Now is the time for Netflix to ensure that it trumps the competition.
All the news is negative. It's losing "The Office," "Friends."
I don't watch either, but there's such blowback that my fealty to Netflix is wavering, I want to be a member of a winning cult. And I know Netflix is countering with all the product it still has, and the press is talking about viewer numbers, but entertainment is not facts, it's about hearts and minds!
And Netflix is losing them.
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