With recent announcements on the major US broadcasters set to launch their own video streaming services, the category is hotting up and so has the commentary on the potentially negative ramifications for Netflix.
Business Insider (here) highlighted three reasons why analysts remain bullish on Netflix’s ability to weather risks and forthcoming competition:
1. Netflix subscriptions are proving increasingly impervious to price hikes
2. Netflix are increasing in confidence in their product, and
3. It is solidifying itself as a 'must-have'
However, there is more to Netflix’s price rise than these elements. In addition, Netflix is capitalising in three places:
1. Customer Retention: As a ‘must-have’, Netflix will also be placed as the incumbent or current/embedded sub and habit. Psychologically users will find that harder to let go and harder to reconcile too many subs with a smaller wallet capacity
2. Competitive Catalogue Development: Netflix retains contracts for a good deal of the content owned by the producers of the new services for more than 12mths allowing them to better monetise it and increase its coffers for original content and beef out an even healthier, more competitor catalogue
3. Marketing/PR: The run time to launch and scale subscriptions of new services allows not only more content releases but more success stories and PR for Netflix, thereby cementing its status as premium and as a 'must-have'.
It's neither arrogant nor desperate; it's strategic.
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