![]() ![]() That creates a wide pricing umbrella under which Netflix should be able to raise prices for a very long time, especially as it keeps improving the service with more and more content. That's about 60 hours of entertainment per month, on average, for $12.99, which is a paltry cost per hour of just $0.22.Īt the same time, households are used to paying $80 or $100 per month for cable TV - and many of them now watch Netflix as much or more than cable TV. The average subscriber watches about two hours of Netflix per day, according to the company's former vice president of original content. Just consider the value proposition of the Standard Netflix subscription that costs $12.99 in the U.S. ![]() Subscribers recognize the attractive value proposition of Netflix and generally accept the occasional price increase without much noticeable resistance. After all, the Netflix of five or seven years ago had far less content than the Netflix of today and should cost more now than it did then. ![]() And the improved service with that much more content provides a greater value to subscribers, which allows Netflix to occasionally raise prices. That attracts even more subscribers, which increases subscriber revenue further. And that content is targeted at new demographic and interest groups, and new geographies to ensure that eventually almost everyone will find something that interests them on Netflix. The more subscribers it attracts and the more subscriber revenue it brings in, the more it can afford and justify reinvesting in even more content. It will be extremely difficult for a competitor to surpass Netflix in global subscribers and streaming revenue without matching or exceeding Netflix's content budget. With over 195 million paid subscribers and, importantly, near $25 billion of streaming revenue this year, Netflix can justify spending around $11 billion on content this year and more next year as production continues to ramp up after the COVID-related pause. And one could argue Amazon's "over 150 million" global Prime members should be considered a close challenger as well, but surveys indicate the vast majority of Prime members subscribe primarily for the fast, free shipping benefit, not for Prime Video. Disney's Disney+ is the closest direct challenger with 60.5 million paying subscribers as of early August. No other SVOD service comes close to achieving that level of global scale. Of the roughly 37 million paid subscribers the company added over the last 12 months, about 31 million - 84% - of them came from outside the UCAN segment. The other 63% is made up of the 32% in the Europe, Middle East, and Africa (EMEA) segment, the 19% in the Latin America (LATAM) segment, and the 12% in the Asia-Pacific (APAC) segment.Īnd when we consider where the company's recent growth is coming from, it's even more clear that Netflix is increasingly becoming a global business. and Canada - is now only about 37% of the total subscriber base. ![]() The 73 million paid subscribers in the company's UCAN segment - representing the U.S. Last week, the company reported that it ended the third quarter with over 195 million paid subscribers around the world, which represented 23% growth compared to one year earlier.Īnd Netflix is truly a global business. Netflix is truly dominating the subscription video-on-demand (SVOD) market. ![]()
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