Why Netflix has to raise prices because of Disney


Impressive. Otherwise, one can not summarize the development of Netflix in recent months: In the three months to the end of December alone, the streaming service was able to post 8.8 million new payment subscriptions. In the US home market 1.5 million new customers were added, internationally 7.3 million. As a result, the total number of subscribers at the end of the year rises to a good 139 million. That's more than ever.

Growth above all, that's Netflix's motto. But the strategy has its price - in the truest sense of the word: a close look at the quarterly figures shows that despite the official profit ($ 134 million), the group had a negative cash flow of $ 1.3 billion. For the entire fiscal year, it was even three billion. In other words, despite the rocket-like growth, Netflix burns a lot of money.

The business is getting tougher

On the one hand there is the expensive license business. The series "Friends", for example, which ran on NBC from 1994 to 2004, is one of the most popular on the streaming portal despite its age. Netflix wanted to throw the series out of the catalog, but got directly to feel the anger of the fans. In the end, the group transferred about $ 100 million to Warner Media to show the series in 2019.

But even with all the money in the world Netflix can not win this fight in the long run. Disney and the AT & T-owned media group Warner Media want to start their own offer this year, so other streaming services will gradually be revoked. In addition to the well-known animated films, this also affects the "Star Wars" and Marvel productions. Apple is also preparing to enter the serial business and secures more exclusive titles.

Series are solution and problem

In order to become more independent, the Group is therefore increasingly investing in its own series, films and documentaries. This sets Netflix apart from the competition. And at the same time creates a new problem, because the productions cost a lot of money. For the hit series "Stranger Things," with a new season starting on July 4, each episode costs up to $ 8 million. A whole season beats with 50 to 100 million to book. Overall, as the latest figures show, Netflix has approved productions worth nearly $ 20 billion (!). The money must first be earned, especially since the debt mountain should be between ten and twelve billion US dollars.






That's why Netflix has already raised its prices in its home market in the United States. New subscribers will now pay up to 18 percent more, and existing customers will have to dig deeper in a few months. Experts expect Netflix will sooner or later - probably rather short - in other countries raise prices. In Germany, the Group is already testing how much customers are prepared to pay. Depending on the experiment, up to 17.99 euros per month are required. That's four euros more than before. Find out more here.

Netflix: growth and price increases

Netflix is ​​at a certain point at a crossroads: the group has turned the entertainment industry, has been immensely successful and called numerous imitators on the scene. However, the success made former allies antagonists. Many years ago, analyst Richard Greenfield compared the company to a "monster" created by traditional media companies that endangered their own future.

Over the next two years, it will become clear whether the strategy is the result of crazy growth and regular price increases, or whether Netflix has got away with the billion-dollar investments.

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