The Influence of Streaming Video
The rise of Netflix has been nothing short of amazing. The subscription-based video-on-demand site is producing loads of binge-worthy original content and continues to grow by leaps and bounds, adding more than 8.3 million new subscribers from October through December 2017.
Why is Netflix so successful? Some feel as though the answer is their social media presence with viral content.
They recently increased the price of their subscriptions and still exploded past their own growth expectations. According to stock analyst John Janedis with Jeffries & Co, Netflix is grabbing a big share of the social spotlight compared to other networks or cable television:
New Netflix original shows generated an average of 30 percent more mentions on Twitter when compared with new shows on network or cable television, he said, recommending investors hold Netflix shares, setting the 12-month price target at $141, a 6.6 percent downside from Tuesday’s close price of $153.08.
“Management has tied the outperformance of original programming to periods of higher [subscriber] growth, which continues to be the biggest driver for the stock on a quarterly basis,” Janedis wrote in a note on Wednesday. “If NFLX’s platform is more conducive to producing ‘viral’ content, this could be a sustainable advantage over traditional media platforms as well as other digital platforms with less scale.”
Twitter activity can gauge the future success or cancellation of original programming, Janedis said. Following the second season launches of “The Get Down” and “Sense 8,” two Netflix original series, marked declines in social media activity preceded each show’s cancellation.
Read more here: A secret to Netflix’s success: Social media
Netflix started out as a DVD rental and sales site in 1997, where you chose a video online and it came in a red envelope. They purposely chose a business model contrary to Blockbuster, using a flat-fee of unlimited rentals without due dates, late fees, shipping and handling fees.
In 2007, they morphed their product to an online streaming service, allowing customers to download movies from the net. Their foresight was extraordinary, and one key to their success was their extensive personalized video-recommendation system based on ratings and reviews by its customers.
Fast forward to the present, and their membership continues to expand, with a full head of steam going into 2018:
Video On Demand
Disney pulling its content from Netflix in August 2017 was not a big surprise. It comes at a time when video streaming is where the money is. In fact, statistics show that fewer people are going to the theater to watch a movie.
According to a survey by Nielsen, young people between the ages of 12 and 24 are where the biggest numbers are dropping for moviegoers. They prefer to watch shows on their own schedule and skip the expense of the movie theater.
Video on demand is the key, and Netflix has the right formula. Not only is the movie industry hurting, cord cutters are choosing to cancel expensive cable subscriptions.
What is the cost of a Netflix subscription since their price hike?
Netflix has increased the price on two of its three subscription tiers. The midrange “Standard” plan that allows users to watch content on two screens at once has been bumped from $9.99 per month to $10.99 per month. The top-tier “Premium” plan, which allows for four simultaneous streams and access to higher-resolution content, has been upped from $11.99 a month to $13.99 per month. The basic plan that offers single-screen streaming remains at $7.99 per month.
Competition from Disney, Amazon, Apple, and others streaming services may loom on the horizon, but Netflix isn’t showing any signs of slowing.