Netflix is going to have to make some changes going forward if it is going to be able to continue to grow and be profitable in the future. Fierce Online Video reported that Netflix was going to reach the limit of its US subscriber base. If this happens the company will have to increase profits in a different way other than domestic growth. We have some ideas what may be coming next.
Tightening of account usage
Netflix has about over 40 million subscribers in the US and 17 million worldwide but we all know that the number of Netflix users is larger. This is because of the prevalence of people who instead of paying the monthly fee of 8-12 dollars a month instead opt to use a the log in of a friend or family member. The majority of the time this is a mutual agreement but either way that is a subscription that Netflix does not get. If the company would like to grow its subscriber base in the US it must find a way to convert the number of people who access the service for free in to paying customers.
Netflix has already raised prices for new subscribers once. This was a clever way to get more money from its base without angering those who have been loyal customers over time. The service may well raise prices again on new customers or even existing customers with the promise of maintaining or increasing the level of programming. A more likely possibility would be to further increase the fees for multiple user accounts which is what allow Netflix to be seen on multiple screens. If the cost of providing access to a buddy from work becomes too high then one may be motivated to cut the bigger package back and force the recipients of said password to sign up for their own accounts.
Netflix has built its service around subscribers and has provided its subscribers access to thousands of titles without any commercial interference. This works out well streaming fans who for some reason think that if one pays for a streaming service that they should not be made to watch commercials. Those who subscribe to this notion ignore the fact that a majority of cable channels (which do not come cheap) include commercials and those that don’t like the premium movie networks still advertise for their own in house events. Netflix, more than any other company this side of Amazon knows what its customer base likes. Should it leverage this information with advertisers it could craft an effective commercial outreach campaign through pre-roll (before a feature) advertising that could be desirable to advertisers. Could we start seeing commercials on Netflix? It would do no worse than make Netflix like every other medium of content delivery. It will be worth noticing how well Amazon’s rumored add-supported service works out.
More International Growth
Obviousely if the company can not win more eyeballs in the US it must do so outside of the boarder. There are millions of potential customers across the globe. Netlfix is already available in a number of European countries as well as other countries in the Americas. Effective outreach to customers outside of the US will be key for the company going forward and could stave off the options mentioned above.