Netflix is not infallible… (a cautionary tale for video streamers)

Michael Whalen
6 min readJul 21, 2019

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This week, Netflix (NFLX) reported that it lost 100,000 subscribers (in the United States) instead of gaining the 300,000 in the second quarter that Wall Street anticipated. The reaction to the news was swift and brutal as the stock took a 10% nosedive. In the days since the announcement, Netflix has been sending out “positive” advisories about their commitment to creating “value” for subscribers and stockholders. Some analysts on Wall Street do not see those lost subscribers coming back anytime soon. Very simply, many subscribers felt betrayed by the recent across the board price increase (Netflix’s 8th price increase since 2007).

Sometimes you need an ass kicking to get the message… but hopefully Netflix has learned some important lessons in the past few days that we in the music business have known for over 20 years:

  • Price matters. Netflix’s May 2019 price increase was a total disaster. Badly marketed and seemingly done as a reaction, they raised their basic service a $1 and $2 for the “premium” service. It doesn’t help that so many new platforms are going on-line very, very soon and have done a good job getting their audiences excited (Disney). Apple (AAPL) has said that its new Apple TV+ service will be “free” for a time. We’ll see…
  • No one can dominate or monopolize in a streaming environment. The beauty of video streaming is that it is an instantaneous resource that is not anchored to old fashioned television schedules nor is it finite. Streaming works on an infinite geometrical curve that confuses many businessmen who think that video streamers live conventional lives and watch video at conventional times (insert laughter here). Haven’t they heard of “binging” a series in a day? But beyond the technical “gee-whiz” factor, tastes and habits in a streaming world can change in a New York minute. Netflix has tried very hard to corner the market on the best content creators (Shonda Rhimes, Kenya Barris, Ryan Murphy, The Obamas, Jerry Seinfeld and others) by driving the price up for top producers to create their programming. While it has made a few people more wealthy, their strategy has not worked. Netflix should have looked to the days of the “old” studio system in Hollywood for how and why their multi-billion dollar scheme was doomed. Creativity and the…

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Michael Whalen

Emmy® Award-winning composer, record company executive, copyright expert, dad, dog owner and CrossFit newbie