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October 14, 2015

Netflix says its price hike is all about acquiring more content

by John_A

Netflix headquarters in Los Gatos, California, Tuesday, July 8, 2014.  (Paul Sakuma Photography)

Netflix has released its quarterly earnings today (PDF), and so far, the folks on Wall Street aren’t responding positively. Of course, customers have already heard the big news — Epix movies and Sesame Street are gone, its first movie Beasts of No Nation premieres tomorrow night and the price for most of us will go up $1 next year. So what’s driving a stock drop (down about eight percent after the results came out)? It didn’t add as many new subscribers in the US as it had predicted (1.15 million predicted vs. 880,000 actual), and with plans to spend some $5 or $6 billion on content in 2016, it will need to grow to pay for all of that. According to CEO Reed Hastings the recent price hike is meant to “improve its ability to acquire and offer high quality content,” but Disney doesn’t come cheap.


Source: Netflix Q3 2015 earnings (PDF)

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