Maybe Netflix was right after all. No, not in the way they handled their price increase, but maybe in their logic for creating the increase in the first place. See, we've always assumed that Netflix's price hike this summer was about setting the stage for streaming video as the primary service for the future. And if that's the case, new data from comScore suggests that the move might have had the intended effect.
Sure, they lost subscribers (still well over 26 million remain though). And the PR nightmare cost them some serious stock value as well. So it might be tempting to say the price hike had unintended negative effects. But what if Netflix actually expected all that? What if this has always been a move for them that was about short term pain for long term gain?
Netflix Beats Hulu In Time On Site
comScore says Netflix users spend twice as much time on the site as Hulu users do. That's… astounding. And here's the really interesting part: the increase in time spent on site at Netflix occurred right when the price hike took effect in September, as this graphic from TechCrunch shows:
Time spent on Netflix by users jumped from 820 million minutes to 1.03 billion just as the price hike hits. I can only assume that's not a coincidence, and that millions of users were doing exactly what Netflix had hoped: jumping on the streaming service more often to get more for your monthly membership dollars. Total users and stock prices might have gone down… but one really important number is going up: engagement.
Maybe Netflix saw the lost customers (and the following stock drop) as necessary evils toward a better business model? Maybe they felt they had no choice? Regardless, those users who did not leave the service dramatically increased their time spent using the service once the price jump took effect. So while they may have fewer total customers now, they definitely have more active, more engaged customers.
I suppose we should be fair, and talk about how there are a few reasons for Netflix users to spend time on the site (managing their queue, for one) that don't actually include video watching, but I have to think that's relatively minimal in the overall numbers.
It's also worth pointing out that while Hulu and Netflix are definitely competitors, they have different business models and entirely different content offerings. But don't forget that a ton of Hulu content is free, while none of Netflix's content is… which makes these numbers even more impressive, if you ask me.
Does advertising play a role in these numbers? Hulu is full of ads, and Netflix is not. I wonder how many users are turned off to long-term Hulu sessions by the ads. I know I've spent many a Saturday afternoon watching multiple titles on Netflix with no commercial interruption, and it's glorious.
But this is only a trend right now, and only over the last couple months. But it's definitely worth keeping an eye on and discussing. What about those of you still with Netflix? Are you using the service more these days?
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