Netflix pricing to increase in NZ by upto 19%

Forums › Online streaming services › Netflix pricing to increase in NZ by upto 19%

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#2287186 1-Aug-2019 14:28

tdgeek:

If the US freely allows companies to decide what profit to report then I guess you are correct, but that not my understanding. TVNZ's writeoff is not the same as intentionally understating profits by playing with digital content amortisation. In any case it would not be that hard to look at cashflow, "reported" profits, content assets, and find the date where this will tank. Notwithstanding those that fund the cashflow having an interest in that. Maybe I should send my degree back to Sanitarium!

IMHO, danger signs will be seen well before it bites, thats what will cause consolidation to occur, this is all natural.

When you are fully versed in ASC 920 and ASC 926 (and there proposed and adopted amendments from the FASB then you can award yourself an extra degree. Film and Television accounting is a dark art not a pure science. Take clause 35-12A of ASC 926-20 for example - and ask yourself how often the entity should be asking the question about value for each film?

And the US is no different to NZ or Australia. Companies can make all sorts of assumptions especially with respect to intangible assets. Impairment tests are funny things. Spend some time trying to reconcile reported profit with taxable profit - it'll do your head in!

The canary in the coal mine (or danger signs) are when the entity finds it harder and harder to borrow more debt or refinance debt (as evidenced by greater proportion of junk debt). When the debt financiers dont have the confidence of repayment then things get interesting.....

FYI, the relevant part from the 10Q:

"Based on factors including historical and estimated viewing patterns, we amortize the content assets (licensed and produced) in “Cost of revenues” on the Consolidated Statements of Operations over the shorter of each title's contractual window of availability or estimated period of use or ten years, beginning with the month of first availability. The amortization is on an accelerated basis, as we typically expect more upfront viewing, for instance due to additional merchandising and marketing efforts, and film amortization is more accelerated than TV series amortization. We review factors that impact the amortization of the content assets on a regular basis. Our estimates related to these factors require considerable management judgment."

You'll note the final sentence.

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#2287200 1-Aug-2019 14:40

Come On Apple Inc 🍎 Buy Them Out 😀 and do what you do Best - Change, Improve and Innovate ❗️

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#2287201 1-Aug-2019 14:46

idk, $22 a month is getting pretty pricey IMO.

sure if it was just the one or two services you needed, but netflix mostly just has their stuff these days, so you binge that then dont watch much of anything for a while.

so yeah.... theyre pushing their luck with me

Dial111

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#2287205 1-Aug-2019 14:55

Sure I was happy to pay $18.50 for the privilege of having 4K content, even if it is very limited for my tastes, but $22 for much of the same, I think I’ll jump down a tier before I’m charged the new price, I’ve got a month to go.

jonathan18

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#2287207 1-Aug-2019 15:00

$5.50 a week is pricy?

Or, $3.90 a week for the middle package?

Nah, that's still a damn good deal in my book.

The problem comes when one feels the need to subscribe to multiple VOD services to ensure access to a range of programmes - that's when the price starts adding up.

That said, given the ability to get Amazon Prime free for a year from 2D, or Netflix in a Spark package, it's fairly easy to get a huge amount of content for a month for less than the price of one serving of smashed avocado (tongue firmly in cheek).

Dingbatt

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#2287209 1-Aug-2019 15:03

For us, the four streams are more important than the UHD content.
While the increase is hurtful (not really), the blow is softened by the Spark Entertainment package absorbing half of the increase. Other services seem to have annual increases, just a fact of life.
Maybe I’ll increase my hourly rate to cover all these price rises.

Edit: @jonathan18 Smashed Avo is hard to eat with your tongue in your cheek 😁.

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tdgeek

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#2287212 1-Aug-2019 15:09

ockel:

When you are fully versed in ASC 920 and ASC 926 (and there proposed and adopted amendments from the FASB then you can award yourself an extra degree. Film and Television accounting is a dark art not a pure science. Take clause 35-12A of ASC 926-20 for example - and ask yourself how often the entity should be asking the question about value for each film?

And the US is no different to NZ or Australia. Companies can make all sorts of assumptions especially with respect to intangible assets. Impairment tests are funny things. Spend some time trying to reconcile reported profit with taxable profit - it'll do your head in!

The canary in the coal mine (or danger signs) are when the entity finds it harder and harder to borrow more debt or refinance debt (as evidenced by greater proportion of junk debt). When the debt financiers dont have the confidence of repayment then things get interesting.....

FYI, the relevant part from the 10Q:

"Based on factors including historical and estimated viewing patterns, we amortize the content assets (licensed and produced) in “Cost of revenues” on the Consolidated Statements of Operations over the shorter of each title's contractual window of availability or estimated period of use or ten years, beginning with the month of first availability. The amortization is on an accelerated basis, as we typically expect more upfront viewing, for instance due to additional merchandising and marketing efforts, and film amortization is more accelerated than TV series amortization. We review factors that impact the amortization of the content assets on a regular basis. Our estimates related to these factors require considerable management judgment."

You'll note the final sentence.

considerable management judgment ok, fair play. What I bolded is where I was coming from. Amortise a lot, sooner, as thats where the revenue match the costs closer. Two year old not bad movie has to be worth not much, a not bad TV series also not worth much, although I can see them being longer life

Yes, I guess it can be a cowboy exercise evaluating content.

tdgeek

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#2287213 1-Aug-2019 15:11

FineWine:

Come On Apple Inc 🍎 Buy Them Out 😀 and do what you do Best - Change, Improve and Innovate ❗️

You forgot Charge!

(yes I am an Apple user)

mattwnz

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#2287253 1-Aug-2019 16:18

tdgeek:

tehgerbil:

a ~20% increase with no increase in value is a cheeky move regardless.

For years they made losses, then when they turned a profit it was a very small fraction of sales. Today's new pricing is probably about right for them, and the market.

Peronsally I would doubt the price rises will stop, but time will tell. Services like these seem to be rising by more than inflation. It is a bit like Disneyland annual passes, where they raise every year by more than inflation. So over time it does become less and less affordable for more people, but there will always be a strong demand, because there isn't an alternative.

tripp

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#2287283 1-Aug-2019 16:35

dafman: So instead of being 50 times cheaper than Sky, after the increase Netflix will only be 49.97586 times cheaper than Sky. (Ok, I didn't really do the calc. My point being that even after the increase, Netflix remains outstanding value for money when compared against our local dinosaur).

Unless you want new released movies or tv shows (excluding netflix original)

tripp

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#2287288 1-Aug-2019 16:41

Pricing is a funny thing, for a streaming service when you get past a price point (in this case $10 increments) people get funny.

i.e. if the price is 19.95 people think "ah under $20 a month so sweet" but if you make it 20.95 you do get people jumping or downgrading.

It would have been better to put the bottom tier up more and have smaller increases on middle and top tier.

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Talkiet

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#2287302 1-Aug-2019 17:17

networkn:

I found 4K was horrible, juddering mess. I am back on 1080P and don't miss it.

That will be a problem on your end then. I'm watching 4K stuff most nights from Netflix on a Samsung 4K Q6 QLED and a Sony VW270 4K projector - smooth as silk. (My client is an Nvidia Shield through a Denon Amp.

Don't blame the service...

Cheers - N

Please note all comments are from my own brain and don't necessarily represent the position or opinions of my employer, previous employers, colleagues, friends or pets.

Dial111

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#2287314 1-Aug-2019 17:46

Yeah I have no problem with streaming 4K content from Netflix either, it’s just I’m not overly keen to pay more for the same stuff, given there isn’t much worthwhile in 4K that I like or I’ve watched most if not all I do like. I’m still going to be a subscriber just at the middle tier.

dafman

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#2287318 1-Aug-2019 17:54

Dial111: Sure I was happy to pay $18.50 for the privilege of having 4K content, even if it is very limited for my tastes, but $22 for much of the same, I think I’ll jump down a tier before I’m charged the new price, I’ve got a month to go.

Many years ago, two new release movies from Video Ezy for a Saturday night's viewing cost $24. Now $22 for a month's unlimited viewing is stretch. Funny ol' world.

tdgeek

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#2287328 1-Aug-2019 18:17

mattwnz:

tdgeek:

tehgerbil:

a ~20% increase with no increase in value is a cheeky move regardless.

For years they made losses, then when they turned a profit it was a very small fraction of sales. Today's new pricing is probably about right for them, and the market.

Peronsally I would doubt the price rises will stop, but time will tell. Services like these seem to be rising by more than inflation. It is a bit like Disneyland annual passes, where they raise every year by more than inflation. So over time it does become less and less affordable for more people, but there will always be a strong demand, because there isn't an alternative.

Marketing 101, what the market will bear.

Disney, funny you say that, my mate asked what the passes were, I said I cant remember. I forget what he said but it was HUGE, they are planning a trip.

Bleed what you can.

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