Netflix 4Q13 Earnings Call Notes

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A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Reed Hastings: Your guess is as good as mine about what NFLX should be worth

“I think we will just stay focused on doing the best we can on improving the service, growing the membership and I don’t know that’s I think, I have any differential insight into the right price of the stocks.”

Large screen centric, less driven by mobile trends

“For a lot of our entertainment, we are really pretty large screen centric. And so we are less driven by mobile trends than say a music service would be.”

On the philosophy of pricing for simplicity

“in fact great product is a combination of functionality and ease of use and that simplicity wasn’t always the best choice and so it’s through the conversations over the last year I think I’ve shifted away from simplicity to an end goal to simplicity as an input towards ease of use and towards matching functionality that people want and so we have slightly are more focused on best functionality independent of it’s simplicity and of course try to make it as easy to use and we try to make our pricing as straightforward as possible, but it’s not clear that one price fits all.”

People price on heuristics

“in pricing period, there is also a sense that consumers make choices around heuristics. And so a dollar rich might not sound like a lot on a logical basis, but consumers may have shortcuts that they make, they take the middle or the upper or the low and so that factors into the right course as well.”

Our brand is commercial free

“We have no play on to go towards advertising based models. Our brand at least over the next couple of years and at this point really stands for that commercial free experience”

Go to extremes to please your customer

“we have got a go to great extremes to give consumers control of the content you know going all the way to the extreme of putting the entire season out at one time”

Netflix has enough muscle to fight net non-neutrality

“if ISP especially major ISPs were to contemplate blocking Netflix or other services it will significantly fuel the fire for more regulation which is not something they are interested in.”

4K video is a catalyst to adopt higher speed connections from ISPs

“If you are on the cost side than ISP, then you may be affected by that and think about that, but if you are on the revenue side, you are celebrating, because now there is a real need to get a 40 or 50 megabit plan. So you could support two streams and you have got something to get people to upgrade to the faster plans.”

Applications push computing power push applications

“For 20 years, we saw PCs get faster, applications get richer, which was a reason to get faster PCs, which then enabled richer applications. And that ecosystem really grew”

Don’t underestimate the competition

“So there is a number of players in all the major markets and then the smaller markets. They are all doing good work. I think what we have seen with our success in the UK is that there can be very strong players like the BBC iPlayer, (indiscernible) and Sky. And we can still build a very successful business. And so I think the key is having unique content, a great reputation, a good value proposition and we can succeed and in many cases, that competitors can also.”