Peter Kafka

Recent Posts by Peter Kafka

Netflix Content Boss Says Price Hike Isn’t a Price Hike, But Is a “Radical Change”

How come Netflix was taken by surprise by consumer reaction to its price hike, which forced the company to cut its subscriber forecast today?

That’s the question posed to Netflix content boss Ted Sarandos by News Corp. digital boss Jon Miller today at a Paley Center event in Los Angeles.

Sarandos’s response is basically a shrug: “Being able to precisely forecast and predict the behavior of that many people on fairly radical change is something that we’ll get better at all the time.”

Miller didn’t press Sarandos, and Sarandos didn’t evince any sense that the company had second thoughts about its price hike, which he argues really isn’t a price hike.

Wall Street is not nearly as sanguine, however, and has chopped NFLX shares down by 18 percent today, to $170. Recall, again, that NFLX was nearly at $300 earlier this summer.

And here I should point out that News Corp., Miller’s employer, also owns this Web site. Other disclosures, which Miller noted in his introduction: Miller is a board member of Netflix competitor Hulu, and News Corp. has content deals with Sarandos and Netflix.

So: Many conflicts here! But this is still a very good, very timely interview. Runs about 40 minutes, and well worth watching if you want to dive deeply into both Netflix and the digital media business.

If you’re looking for Sarandos’s take on the end of the Starz deal, by the way, that kicks in around the 20-minute mark. Very short version: “Buyers and sellers disagree on values and prices all the time. And that’s all that happened,” Sarandos says, adding that his plan is to “spend an enormous amount of money on things that get watched an enormous amount of time.”

That doesn’t jibe with reports that the deal broke down because of Starz’ insistence that Netflix institute a new pay tier for its content. But maybe someone can ask about that in a different interview.

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