🍿🤑 Hide! Netflix Is Onto Us!
Happy Hump Day everyone,
It’s Wednesday and we’re here to get you over the Hump and onto Friday Jr.! If you didn’t hear already, the new Batman movie starring Robert Pattinson is killing it, global stocks are making a push, the Starbucks CEO is retiring, and Covid is causing Disney Shanghai to close doors temporarily. Another interesting week so sit back and let us give you a recap.
Hate to break it to you but Netflix knows you share your password and they’re about to start charging you for it. For some of you that means that you’ll have to have an uncomfortable conversation with your buddy’s ex-girlfriend’s dad’s cousin about keeping you on the account or else you’ll have to start paying for your own.
Over the last year, Netflix has been working on a feature that would '“enable members who share outside their household to do so easily and securely, while also paying a bit more,” the company said on Wednesday. Essentially, they plan on charging a $2.99 fee to add up to two people onto the existing account. This comes just a few weeks after Netflix raised the price of their monthly subscriptions. Thankfully though, you’ll have some time before this feature reaches the U.S. as Netflix is testing it over the next few weeks in Chile, Costa Rica and Peru.
Netflix is potentially playing with fire by raising prices and adding fees because they risk scaring off customers and losing them to cheaper, similar quality streaming services such as HBO Max and Disney+. Facing extreme competition, the crackdown on password competition would very likely increase the rate at which subscribers churn as people would subscribe for short periods of time, binge all the content they want to see and then cancel the membership. A workaround could be to drop new episodes on a weekly basis instead of all at once but Netflix risks further harm to an already strained relationship with users.
Shares of Netflix were up around ~4% following the announcement but we’ll have to see if this feature ever makes it to the United States. The stock is down almost 50% from ATHs and managed a mere 9% growth in paid subscribers in 2021 after 4 years of averaging 24% growth.
Would you keep your subscription if Netflix added this fee? How far are they willing to go to make a few extra bucks per subscriber? The market responded positively to the news but will it continue to?
In other news, my team and I are nearing a premiere of our new series / content-type on YouTube and we can’t wait to share that with you. Be patient and keep on the lookout!
Have an amazing rest of the week and we hope to see you next Wednesday as we successfully make it over another Hump!
- Humphrey & Rickie
In the Markets
Weekly News Roundup
Netflix Wants to Charge Users Who Share Passwords (CNN)
Netflix is cracking down on users who share accounts with those outside their households. They are planning on testing a feature that allows users to share passwords with two outside people for $2.99 in Costa Rica, Peru and Chile.
HY: We won’t know the full effects of this change until many quarters later and how it affects their subscription rates.
Germany Opens Door to Qatar Natural Gas in Pivot From Russia (BBG)
Qatar agreed to work on supplying Germany with liquefied natural gas as Europe’s largest economy seeks to reduce its dependence on Russian energy. Germany’s challenge, however, is finding short-term alternatives to Russian gas this year.
RH: Long-term solution with no short-term vision. Will be interesting to see what they’re able to work out.
HY: Not sure how quickly this will happen but hopefully alleviates some strain globally on oil.
Powell Says Fed Will Consider More-Aggressive Interest-Rate Increases to Reduce Inflation (WSJ)
After the Fed raised rates last week from near zero to a range between 0.25% and 0.50%, Fed Chair Jerome Powell said the central bank was prepared to raise interest rates more aggressively if it becomes necessary to bring down inflation. Officials penciled in a series of increases that would raise rates to ~2% at the end of this year and around ~2.75% next year.
HY: Some hikes aren’t bad, I don’t view this as a bad thing - it means that the Fed is probably more comfortable with the labor market now so they are either picking the lesser of two evils (tight labor market or high inflation), or they feel comfortable with raising rates.