Can Netflix (NFLX) co-exist with all of these other options? Will people pay $15.99 for a premium subscription on top of what will be a $6.99 Disney offering and a $11.99 per month YouTube premium sub?
I think the answer is a resounding yes. That's because last night's Netflix conference call really crystallized it all for me.
Because last night I realized how much I have missed out on since the last conference call. What was I thinking missing Triple Frontier, a Ben Affleck action movie seen by 52 million households? My wife watched Umbrella Academy and loved it. Forty-five million others did, too. I guess I have to. If Korea loved Kingdom maybe I would, too. At least I watched Fyre, the Greatest Party that Never Happened. At least I had that to talk about.
And there you go. Netflix is about something to talk about Monday morning. It's about not feeling like a stooge when everyone watched Bird Box. You can't be a stooge! In other words, as ethereal as it sounds, Reed Hastings is right when he says "the real metric is can we keep our members happy."
With merchandise like The Irishman, the story of Jimmy Hoffa's murder, how can you not keep us happy? If a family of six, like we have, wants to go to the movies I will lay out more than a hundo. But to watch the Irishman, the first time De Niro and Pacino, directed by Martin Scorsese at home on my big screen with some beverages and candy that cost a fortune at the movie house but are imperceptible to my budget? How do you spell necessary bargain?
And to me, that's exactly what Netflix is, a necessary bargain.
These days you must always ask that question if you are going to do your modeling. I don't care what Netflix says about weak domestic. I care about the slate. I care about missing out. I care about not seeing The Irishman.
As David Faber jokes, I have a bunch of hoses. I went over my cable bills this morning and they are without mentioning the carriers: one at $325 a month, a $270 a month, one $225 a month, and two at $187 a month. The horror!
Now some of that is high speed internet. But for the most part those prices are for a handful of games a year and hundreds of channels I do not use. I mean hundreds. There are hundreds of channels that you don't watch. That's how it works.
I look at those prices and the first thing I think of is I have to figure how to make them go down. I look at Netflix, which is raising prices this year by a couple of bucks and I say, wow, "what a bargain, and it's necessary." I can tell you that in all my cable networks there are probably 85 of the first 100 channels that I have never watched and don't intend to.
I intend to watch everything Netflix has to order. Disney (DIS) ? Yes if my kids were younger. Not now. But I take ESPN plus for $4.99 a month, a necessary bargain if you like to be knowledgeable enough about football to win Fantasy which is very important to me. The wife loves Hulu so she can watch when she wants to watch where she wants to watch it. I bet Apple (AAPL) TV will be like that. I don't recall anyone ever asking me about anything on YouTube, but I do wish I had gotten into Game of Thrones. It's over this year. I don't know if I should cancel HBO after my wife's finished watching it. Fifteen bucks a month? Not much of a savings.
In the end it's the $15.99 for what I want versus $325 for a lot of what I don't want. It's $15.99 for what I talk about, versus $100 plus candy for what I probably won't and can't talk while it is going on!
That's why my two millennial kids only take Netflix and think both movies and cable are rip-offs. They can't afford the latter.
You give me some sports packages without those 85 channels from 1 to 100 that I don't use and I would be a cord cutter too, after reviewing those bills. No necessary bargains otherwise. In fact, not bargains at all.