Netflix Set to Raise Subscription Fees in Japan

Netflix is reportedly planning to raise the basic subscription fee in Japan by as much as 13%, following a trend that has seen the SVOD behemoth raise monthly prices in the United States, Canada and the United Kingdom. Japan’s Nikkei 225 Stock Average disclosed the news, which helped send Netflix shares up more than 2% in midday trading.

The increase, which does not affect the premium-priced plan, would see the basic plan price increase to ¥990/month ($9.39) from ¥880/month ($8.34).

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Netflix launched service in Japan — then the world’s No. 2 home entertainment market — six years ago in 2015, largely through the efforts of Greg Peters, current COO/chief product officer, who back then was GM of Netflix Japan.

Peters, on the October fiscal call, said Netflix increased spending of more than $15 billion annually on original productions justified subscription price hikes.

“We feel like there is that opportunity to occasionally go back and ask. for members where we’ve delivered that extra value in those countries to pay a little more,” Peters said.

Netflix added 1.99 million subs in the Asia Pacific region in the most-recent fiscal period (ended Dec. 31, 2020). The region totaled 25.5 million subs, including more than 3 million in Japan. The region is Netflix’s third-lowest generating revenue per subscriber at $9.32, ahead of Latin America at $7.12 per sub. The North American region leads Netflix with $13.51 in monthly revenue per sub.

“With its rich culture and celebrated creative traditions, Japan is a critical component of our plan to connect people around the world to stories they love,” co-founder/co-CEO Reed Hastings said in 2015 at the Japan launch.

Netflix Rolling Out ‘Linear TV’ Service Globally

Netflix is planning to expand worldwide a test feature that allows subscribers to simply click a button and let the streamer pick programming to watch. Tested in France and other markets, the “Shuffle Play” feature acts as an old-school TV channel broadcasting shows on a loop.

Greg Peters, COO and chief product officer, said that as Netflix subs come to the service seeking to be entertained in a whole variety of ways, deciding what movie or TV show to stream can be daunting.

“Sometimes … [subs are] not really sure what they want to watch,” Peters said. “And so we’ve had the opportunity to try and be innovative and try new mechanisms to sort of help our members in that particular state.”

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Greg Peters

Peters said the new feature would enable subs to “skip browsing entirely,” click one button and let Netflix’s algorithms pick a title to instantly play.

“That’s a great mechanism that’s worked quite well for members in that situation,” he said.

Joining Peters on Netflix’s Jan. 19 fiscal webcast, co-founder/co-CEO Reed Hastings asked Peters if the feature was going to be called, “I’m feeling lucky,” or if he was going to come up with something better.

“We’re going to come up with something better than that, so standby for this,” he responded. “You’ll see it when it rolls out.”

Reed Hastings Quashes Retirement Scuttlebutt: ‘I’m in for a Decade’

Don’t expect to see Netflix co-founder Reed Hastings exit the subscription streaming video service until 2030, according to comments the new co-CEO made on the July 16 pre-recorded earnings webcast.

With Netflix announcing that longtime executive Ted Sarandos would share the CEO position while retaining his chief content officer title, scuttlebutt suggested Hastings had one foot out the door.

With a net worth of $5.5 billion and proactive interests in public education and social causes, there isn’t much reason for the 59-year-old Hastings to continue overseeing day-to-day operations of the by-mail DVD rental service-turned-SVOD behemoth he co-launched with software executive Marc Randolph in 1997.

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But that’s precisely what Hastings intends to do, working full-time alongside Sarandos for the next 10 years.

“Let me be really clear on that: I’m in for a decade,” he said on the webcast. “As co-CEO, it’s two of us full-time, it’s not like a part-time deal. It’s definitely broadening the management team. It will be great to have some help as we expand and grow.”

Hastings said he see no changes how Netflix is run over the next few years, having worked with both Sarandos and Greg Peters for years. Peters, who was elevated to COO and speaks five languages, helped launch Netflix Japan in 2015.

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Sarandos said he has worked together with Hastings for more than 20 years — a relationship he doesn’t see changing with his promotion and co-title.

“[Reed has] been an unbelievable role model, a source of inspiration for me,” Sarandos said. “We’ve navigated some of the toughest decisions the company has made over those years, from mailing DVDs all over the U.S., to [streaming video] all over the world.”

Hastings said Netflix a few years ago was largely a premium TV service. Now, he says the service is “really good” in movies, unscripted programming, “emerging” animation and “very strong” in local language shows.

“It’s incredible the expansion Ted’s pulled off over the past five years,” Hastings said. “Think of [the next 10 years as] more consistent with the past than different [going forward]. The beautiful thing … is we’ve got a great model. We’ve just got to make it better.”

Netflix Unveils Executive Pay for 2019 — and Hastings’ Salary Isn’t the Highest

In the coming year, Chief content officer Ted Sarandos will get the top salary — $18 million — and CEO and chairman of the board Reed Hastings will garner the most stock options — 30.8 million, Netflix announced in an SEC filing on its executive compensation.

Hasting’s salary is a mere $700,000 (the same as in 2018), as the executive is taking most of his compensation in stock options. Sarandos will pick up 13.5 million stock options. In the end, Hastings and Sarandos should make about the same in salary and options.

Still, Sarandos’ salary jumped considerably. His salary for 2018 was $12 million with 14.25 million options.

Chief product officer Greg Peters will have a salary of $10 million (up from $6 million in 2018), with 6.8 million options.

Among the other executives, CFO David Wells and general counsel and secretary David Hyman will each earn $3.5 million in salary (roughly a $1 million raise for both from 2018). Wells garners 2.8 million options, with Hyman getting 3.85 million.

Netflix Clarifies Subscriber Growth Projections

Coming off a record fiscal third quarter in subscriber growth, Netflix is again sitting pretty atop the global subscription streaming video market with 137 million subs, including 130 million paid.

In the Oct. 16 fiscal interview webcast, co-founder/CEO Reed Hastings reiterated that the platform – going forward – would focus projections on paid subscribers rather than including new subscribers engaged in free trial service.

“We’re getting a little better on the forecasting in particular the evolution to paid net ads,” Hastings said.“So, I think by focusing going forward on paid, we’ll be able to be a little more accurate and focused on the fundamentals.”

The return to “fundamentals” underscores Netflix’s concern about the market’s backlash in the previous fiscal quarter when the service failed to meet Wall Street and its own subscriber growth projections – estimates that included free trials.

“If you look at that paid net ad growth, you can actually see how remarkably steady [we are],” Hastings said.

To sustain subscriber growth in the mature domestic market, Netflix is streamlining growth projections and focusing on bundling the service with pay-TV operators and mobile phone services, including recent deals with T-Mobile and Altice USA.

“There’s still pockets of consumers who – it’s harder for them to get the activation energy to go directly to the website and sign up, but if we can put … a call to action and bundle that the subscription as part of their pay-TV offering or the mobile offering, they can then get right into the service,” said chief product officer Greg Peters.

Globally, Netflix’s sub growth projections remain relatively unlimited for the near future. Much of that due to the service’s burgeoning presence in India – a country with more than 300 million mobile phone subscriptions.

“A couple hundred million people watching content through the Internet in India is a really exciting idea,” said CCO Ted Sarandos.