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Big Changes Coming to Netflix After Catastrophic Earnings
Christian Hetrick
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
After disrupting the film and television industry, Netflix is about to undergo some disruption itself.
The streaming service announced Tuesday that some big changes are on the way after a disastrous first quarter that sank its share price in after-hours trading. In response, the company vowed to crack down on password sharing—a longstanding issue that Netflix has largely ignored until recently—and co-CEO Reed Hastings all but confirmed that it will finally add an advertising-supported subscription option. The company is even “pulling back” on its spending growth to reflect its new financial reality.
“When we look at the last 20 years…we've gone through a lot of changes, and we've always figured them out one by one,” Hastings said on Netflix’s earnings call Tuesday. “We have a bunch of opportunity to improve, but coming out the other side, I’m pretty sure we'll look at this as really foundational in our continued journey.”
Netflix shares cratered after investors learned that the streaming platform had lost subscribers for the first time in more than a decade last quarter—with its stock price down nearly 26% in after-hours trading, to under $259 per share. Netflix not only shed 200,000 subscribers from January through March, but said it expects to lose 2 million more in the current second quarter.
Part of the problem was that the company lost 700,000 subscribers after suspending its service in Russia, in protest of that country's invasion of Ukraine. But even excluding its Russian retreat, Netflix would have added only 500,000 paying customers last quarter—well below the 4 million it added in the year-earlier period, as well as the 2.5 million it had previously projected for the first quarter.
Netflix management told shareholders Tuesday that COVID-19 had clouded its outlook; the pandemic turbocharged growth in 2020 as consumers were stuck at home, leaving company leaders believing the subsequent slowdown was only a pandemic hangover.
Now, Netflix is acknowledging what many observers have long speculated: The original streaming giant has been battered by the streaming wars. After being caught flat-footed by the rise of streaming, legacy media giants like Disney and Warner Bros. Discovery have joined the market that Netflix essentially created, offering content and pricing that is often as good, if not better.
In a letter to shareholders, Netflix placed much of the blame on password sharing, estimating that 100 million households may be using accounts without paying for them. (The company has 222 million paying customers globally.) Netflix management said it sees a “big opportunity” to monetize those non-paying households.
The problem is “not a new thing,” Hastings acknowledged. Indeed, account-sharing as a percentage of its paying membership hasn’t changed much over the years, Netflix reported Tuesday, and may have even helped fuel its growth by getting more people to use the app. But coupled with other factors, Netflix now believes it is a major headwind—and with new user growth now at a standstill, the day of reckoning for password-sharing may soon be arriving.
The same can be said for Netflix’s resistance to advertisements. Despite other streaming services luring customers with cheaper ad-supported options, Netflix hasn't budged when it comes to commercials—until now.
“Those who have followed Netflix know that I've been against the complexity of advertising and a big fan of the simplicity of subscription,” Hastings said. “But as much as I'm a fan of that, I'm a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense.”
Other changes may also be on the way. Netflix may have popularized “binge-watching” by giving consumers entire seasons of shows all at once, but some industry observers believe that approach fuels cancellations, since consumers can plow through a show then ditch the service before their next monthly bill.
Netflix plans to release the upcoming season of the fan favorite “Stranger Things” in two parts, which could keep some customers subscribed to the platform for a bit longer. Co-CEO Ted Sarandos described the approach as “satisfying for the binger or the one-at-a-time viewer as well.” He also spoke positively of Netflix releasing some unscripted shows in “mini-batches” on a weekly basis.
One place where Netflix doesn’t seem ready to budge is live sports, though Sarandos didn’t completely close the door on that one, either.
“I'm not saying we'd never do sports, but we'd have to see a path to growing a big revenue stream and a big profit stream with it,” he said.
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Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
Watch: Working From Home Challenges and Strategies to Succeed
06:02 PM | April 30, 2020
Join us this Thursday, April 30 at 11:00 am PST for the kick-off of dot.LA Convenes, a speaker series devoted to empowering women in tech in partnership with PledgeLA.
With so many challenges unique to women in this new work-from-home reality, we seek to foster an honest dialogue around these obstacles and discuss specific strategies to combat them.
Women in Tech: Working From Home Challenges & Strategies to Succeed www.youtube.com
About the Speakers
Morgan DeBaun is the CEO and Founder of Blavity Inc.
Morgan DeBaun, CEO / Founder of Blavity Inc.
Blavity Inc. is the leading news company and media brand for Black millennials and Gen Z in the U.S. reaching over 30M millennials a month, surpassing the digital traffic of many legacy black media brands. Since launching Blavity in 2014, the brand has quickly grown to be a strong voice for viral culture, social commentary and a platform for young creators to showcase their work.
Starting her career in Silicon Valley, Morgan graduated with an B.A. from Washington University in St. Louis. Morgan has been widely quoted as an innovator and media entrepreneur in top tier consumer and business publications like Forbes, Huffington Post, NPR, TechCrunch and many more.
In addition to leading Blavity Inc., Morgan angel invests and advises entrepreneurs on how to launch their ideas, innovate and grow their businesses through her WorkSmart Program.
Joanna McFarland, CEO, President and Co-Founder of HopSkipDrive
Joanna McFarland, CEO, President and Co-Founder of HopSkipDrive
Joanna McFarland is the CEO and Cofounder of HopSkipDrive, the innovator in youth transportation. HopSkipDrive is a ride service that helps families and schools get kids where they need to go safely and dependably with a network of more than 7,000 highly vetted CareDrivers. HopSkipDrive currently serves 18 markets in 8 states plus Washington DC, and works with over 200 schools and districts as well as thousands of families every day. Before co-founding HopSkipDrive in 2014, Joanna spent 15 years in product management, building and scaling businesses for top technology, including WeddingChannel, Green Dot, and YP.com. In addition, Joanna spent the first part of her career in investment banking and private equity. Joanna has an MBA from Stanford University and a BS from the Wharton School at the University of Pennsylvania. She lives in Los Angeles with her husband and her two boys.
Beatriz Acevedo is the president of Acevedo Foundation and the co-founder of L.A. Collab SUMA Wealth.
Beatriz Acevedo, President, Acevedo Foundation; Co-founder, LA Collab; Co-founder, SUMA Wealth
Beatriz Acevedo is a leading inspirational voice and Latina entrepreneur in the United States. She has dedicated her career to empower and open doors for the next generation of Latinx leaders.
Beatriz started her career in media at a young age, first on radio and later on television. Her work earned her three Emmy's, one MTV music award, and a media correspondent award, among many others.
Most recently, she became a tech media entrepreneur as the Co-founder and President of mitú, the leading digital media brand for young Latinos in the U.S. The mentorship initiatives that she created through her Accelerator Program, have also provided invaluable access to young Latino storytellers.
Beatriz is a passionate and sought after speaker who enjoys discussions around diversity as good business, female leadership, and the economic impact of Latinos in America. She sits on numerous boards and is an advisor on Mayor Eric Garcetti's tech council as well as on Annenberg's foundation tech initiative, PledgeLA. She recently co-founded LA Collab, a Hollywood initiative to double Latino representation in Hollywood in front and behind the camera by 2030.
Beatriz is the President of her family's foundation "Fundación Acevedo." For the past 30 years, the Foundation has provided scholarships for students who lack the financial means to pursue higher education.
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Annie Burford is dot.LA's director of events. She's an event marketing pro with over ten years of experience producing innovative corporate events, activations and summits for tech startups to Fortune 500 companies. Annie has produced over 200 programs in Los Angeles, San Francisco and New York City working most recently for a China-based investment bank heading the CEC Capital Tech & Media Summit, formally the Siemer Summit.
http://www.linkedin.com/in/annieburford
annie@dot.la
Here's How To Get a Digital License Plate In California
03:49 PM | October 14, 2022
Photo by Clayton Cardinalli on Unsplash
Thanks to a new bill passed on October 5, California drivers now have the choice to chuck their traditional metal license plates and replace them with digital ones.
The plates are referred to as “Rplate” and were developed by Sacramento-based Reviver. A news release on Reviver’s website that accompanied the bill’s passage states that there are “two device options enabling vehicle owners to connect their vehicle with a suite of services including in-app registration renewal, visual personalization, vehicle location services and security features such as easily reporting a vehicle as stolen.”
Reviver Auto Current and Future Capabilities From Youtube
There are wired (connected to and powered by a vehicle’s electrical system) and battery-powered options, and drivers can choose to pay for their plates monthly or annually. Four-year agreements for battery-powered plates begin at $19.95 a month or $215.40 yearly. Commercial vehicles will pay $275.40 each year for wired plates. A two-year agreement for wired plates costs $24.95 per month. Drivers can choose to install their plates, but on its website, Reviver offers professional installation for $150.
A pilot digital plate program was launched in 2018, and according to the Los Angeles Times, there were 175,000 participants. The new bill ensures all 27 million California drivers can elect to get a digital plate of their own.
California is the third state after Arizona and Michigan to offer digital plates to all drivers, while Texas currently only provides the digital option for commercial vehicles. In July 2022, Deseret News reported that Colorado might also offer the option. They have several advantages over the classic metal plates as well—as the L.A. Times notes, digital plates will streamline registration renewals and reduce time spent at the DMV. They also have light and dark modes, according to Reviver’s website. Thanks to an accompanying app, they act as additional vehicle security, alerting drivers to unexpected vehicle movements and providing a method to report stolen vehicles.
As part of the new digital plate program, Reviver touts its products’ connectivity, stating that in addition to Bluetooth capabilities, digital plates have “national 5G network connectivity and stability.” But don’t worry—the same plates purportedly protect owner privacy with cloud support and encrypted software updates.
5 Reasons to avoid the digital license plate | Ride Tech From Youtube
After the Rplate pilot program was announced four years ago, some raised questions about just how good an idea digital plates might be. Reviver and others who support switching to digital emphasize personalization, efficient DMV operations and connectivity. However, a 2018 post published by Sophos’s Naked Security blog pointed out that “the plates could be as susceptible to hacking as other wireless and IoT technologies,” noting that everyday “objects – things like kettles, TVs, and baby monitors – are getting connected to the internet with elementary security flaws still in place.”
To that end, a May 2018 syndicated New York Times news service article about digital plates quoted the Electronic Frontier Foundation (EFF), which warned that such a device could be a “‘honeypot of data,’ recording the drivers’ trips to the grocery store, or to a protest, or to an abortion clinic.”
For now, Rplates are another option in addition to old-fashioned metal, and many are likely to opt out due to cost alone. If you decide to go the digital route, however, it helps if you know what you could be getting yourself into.
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Steve Huff is an Editor and Reporter at dot.LA. Steve was previously managing editor for The Metaverse Post and before that deputy digital editor for Maxim magazine. He has written for Inside Hook, Observer and New York Mag. Steve is the author of two official tie-ins books for AMC’s hit “Breaking Bad” prequel, “Better Call Saul.” He’s also a classically-trained tenor and has performed with opera companies and orchestras all over the Eastern U.S. He lives in the greater Boston metro area with his wife, educator Dr. Dana Huff.
steve@dot.la
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