Creating something that millions of willing buyers can’t live without is the holy grail of innovation, and if last night's results are anything to go by, Netflix Inc (NASDAQ:NFLX, ETR:NFC) might have very nearly done that.
The streaming giant beat Wall Street analysts across most key metrics, adding 5.07 million subscribers and driving a 15% year-over-year revenue growth.
Fourth-quarter guidance was upgraded as a result.
Subscribers, on average, watch Netflix for around two full hours per day. Whether they’re flitting between shows or scrolling mindlessly until they just end up watching Friends again, the end result is the same for Netflix- sticky customers.
Such is Netflix’s ubiquity that investment analyst at AJ Bell Dan Coatsworth surmised that paying for Netflix has become as automatic as paying for gas and electricity.
“Netflix is the one thing people can’t live without and its latest results are testament to its lasting appeal,” he said.
“Households have got used to paying for Netflix alongside their energy bills, rent or mortgage, and all the other big outgoings each month.
“Many don’t bat an eye at the cost and just see it as one of life’s essentials. It’s an affordable treat that provides a bit of luxury after a long day at work, and many customers are staying loyal.”
While Netflix does, indeed, have more good shows than you can count on a single hand, its pricing model has played a major part in maintaining its dominance of the streaming sector.
Netflix’s low-cost pricing plan, subsidised with advertising revenue, has managed to capture a swathe of viewers that would otherwise have been put off by spending $15-plus on a Standard or Premium subscription.
“We love the low price point and increased accessibility that comes with our ad plan," Netflix co-chief executive Greg Peters told investors on Thursday.
With the better part of 300 million subscribers around the world and a share price that has doubled in the past 12 months (and looks set to pump another 5% when markets open today), what’s not for Peters to love?