Netflix (NASDAQ: NFLX) continues to fire on all cylinders, with another quarter of record subscriber growth behind it. Revenue is surging as customers flock to the service, even as the company successfully rolls out price increases.
For a closer look at how Netflix's business is faring and how management is thinking about opportunities ahead, here's a look at some key quotes from the company's third-quarter earnings call. In these excerpts, management discusses its tests with lower price tiers, bundled deals, and movie theaters.
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Experimenting with lower price tiers
Late last year, Netflix started testing mobile-only plans in developing markets as a way to make its service more accessible and broaden its global reach. When asked during the company's first-quarter earnings call about how these tests were progressing, Netflix chief product officer Greg Peters seemed excited about the potential to reach these markets but admitted that the company hasn't finalized its model for reaching these customers yet.
I think that's a great example of something that we're trying out, we're not positive that's the right model, but it's -- we're quite certain that we should do something to find a price tier that's lower than the existing lowest price tier to broaden that accessibility.
The company is looking for "the right set of features at the right price point in a way that the consumer can relate to," added Peters. The experience needs to be "natural and intuitive to the consumer." Peters noted that rolling out a lower price tier will likely be especially effective for member growth in India.
The success of bundled deals
One way Netflix adds new subscribers is by bundling its service with pay-TV offerings or cellular service offerings. Peters indicated bundled offerings are not only working well but also represent a key growth area for the company.
[W]hile these bundled deals are great, they're performing quite well for us and we want to expand them, it's also, I think, relevant to note that, as a fraction through all those channels of the total sign ups we do in any given quarter, in any given year, it's still quite small relative to our organic channel of people signing up with us directly. So we'll see more and more of those and I think it's a nice supplemental channel that accelerates our growth...
What about movie theaters?
When asked about where movie theaters may fit into the company's future, Netflix chief content officer Ted Sarandos said the company is focusing on what is in its control: producing and releasing great movies. But he said he wished its films could be available in theaters at the same time they are released to watch at home.
If I had my way, I would love to have the movies that are on Netflix to be available in 2,000 theaters at the same time that they're on Netflix. We just don't control the programming of those theaters.
Sarandos believes creating the best films possible will create opportunities for the company over the long haul.
[W]e have to focus on making great movies. And then anyone who's involved in the ecosystem of presenting movies and watching movies [will] take notice of those films. So that's what we're trying to do is just make undeniably great movies with undeniably great filmmakers.
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