I'm pretty sure people consistently pay $8/mon, despite the original content. You literally need only stay out of my way, be easy to use on multiple devices, and only entertain me 2-4hrs/mon to keep me coming back.
See, what happens with Netflix, HBO, Showtime -- even regular cable -- is that subscriber churn happens. It's often cyclical. One of the reasons HBO staggers its release schedule for its programming is to try to get people to pay year-round (it's also why they introduced HBO Go -- in essence they gave up their home video revenue, or greatly limited it -- in exchange for keeping people subscribed year-round because of all the content they could get anytime).
Netflix's own figures show that they can jump and fall by the millions per quarter.
If you want people to continue to subscribe every month -- and not cancel after they see the show they like -- you have to have a constant swath of new and original programming.
Even originally programming won't stop churn entirely.
The originally programming is meant to pull in new subs and keep current subs engaged at higher levels so that they are less likely to churn. If you want to cancel your subscription for whatever reason already, it may not matter if they have 100 original series, you'll still cancel.
It's all about increasing the lifetime value of each subscriber. One way is to keep them longer (e.g. reduce churn). The other is to upsell them to higher pricing tiers. We're not seeing that with the original content (yet), but what if Netflix managed to (for sake of discussion) get the rights to Firefly and made another season of it but only for people who signed up for a new "Premium Streaming" package. You'd see some complaints, but a slew of "Shut up and take my money" memes. I don't know if they'll ever do this, but it's the next logical step once they've established the original content as desirable.
You know what keeps me as a Netflix customer was how easy it was to cancel. A few years back, before online streaming, I just wasn't keeping up with the disks.. so I decided to cancel. No phone queue for an hour, no muss, no fuss, just cancelled online. I seem to remember getting maybe one email a month, not two or more a week... And when they added the online streaming, I came back.
I only use it a couple times a month, I find it hard to actually browse their catalog, but they do an okay job of suggestions. And I can usually find something interesting in a pinch. Most of all, I'm paying to keep them around, because of how good the experience was when I did cancel.
Contrast this to XM, when I had 3 radios, and only wanted to cancel one. Took three phone calls, with hold times of over 40 min each, to be mysteriously disconnected when they couldn't convince me to keep service on a radio in a car I no longer had. After that, I cancelled the whole thing.
I'm sure Netflix has churn; I'm sure they have clients that turn the service on for only a few months of the year; I'm NOT sure that is the majority, which is what I assumed you and I were referencing when quoting "people."
I'd literally pay 3-4x as much for the non-original content. Again, that is only 6-16hrs of content Netflix has to serve up, that is only remotely interesting. The convenience and paying for the business model I believe in does the rest.
If HBO offered its service unencumbered of cable subscriptions, I'd still find it less valuable than Netflix.
I don't even think the 8 bucks a month savings would ever be worth the hassle to subscribe/unsubscribe on any regular basis.
That's a brilliant pricing structure; one I never pay any attention to. They easily could get more out of me a month for the amount of value I get from it (and likely even more than that number if the quality of their unique content continues to shine).
This so very much. I find myself looking at software services, and apps, and saying $10? No way. But I'll buy a coffee or 2 a day without blinking. What's wrong with me/people? Why is stuff that's not physical so worthless?
