Too Much TV: Your TV Talking Points For Wednesday, October 26th, 2022

Should Netflix offer a discounted annual rate?

Here's everything you need to know about the world of television for Wednesday, October 26th, 2022.

WHY DOESN'T NETFLIX OFFER A DISCOUNTED ANNUAL RATE?
In recent years Netflix has made a point of not offering a lot of discounted subscription rates. They stopped doing free trial periods a few years back and if they've ever offered a discounted annual rate in the U.S. market, I haven't been able to find a record of it.

But with the launch of Netflix's ad-supported tier, along with aggressive discounting from rivals such as Peacock and HBO Max, is it time for Netflix to offer its own discounted annual rate? At least for a short period?

I reached out to a couple of sources at Netflix, who agreed the idea might have some merit. But they stressed that there is a lot of pride internally that the streamer hasn't had to build subscriber numbers by offering deep discounts. And indeed, recent public statements from Netflix executives have discussed the company's decision to shift away from projecting overall subscriber goals moving forward.

But there are a couple of strategic reasons for Netflix to consider at least a temporary annual price discount. The most obvious reason would be to reduce and/or discourage subscriber churn. Yes, Netflix has a churn rate lower than its competitors and it certainly isn't as desperate to lock in longterm subscribers than say, Peacock. But the churn rate at Netflix has increased over the past year and more worrying for the company, the churn rate for long-term subscribers is also on the rise.

While Netflix executives insist that there won't be a large number of current subscribers trading down into the cheaper ad-supported tier, I frankly find that difficult to believe. Especially when its appears more and more likely that we are headed into a recession. So the challenge for Netflix is to increase the value proposition for long-term subscribers, particularly those paying for the more expensive plans.

When Netflix's ad-supported plan launches next month, this is what the various pricing tiers will look like in the U.S. market:

• Basic with ads : $6.99/month

• Basic: $9.99/month

• Standard: $15.49/month

• Premium: $19.99/month

So what might an annual discount look like? The trick with any of these offers is to make the discount substantial enough to be tempting for subscribers. But not so discounted that it substantially cuts into the overall revenue stream or ARPU (Average Revenue Per User)

If it was me (and Netflix investors are probably happy I'm not in charge), I would not offer an annual rate for subscribers paying the Basic rate. That would only be necessary if the company sees a substantial number of subscribers trading down to the ad-supported tier. And in that case, they could offer a 6-or-12 month discounted Basic rate, but only to subscribers of the ad-supported tier. Getting them to trade up for an extended period would be worth the financial hit.

I would focus on locking in subscribers who currently are paying for a Standard or Premium plan. Offer something that is billed as a temporary deal - along the lines of a year of the Standard package for $150 (a $35.88 discount) and a year of the Premium plan for $200 (a $39.88 discount). That's enough of a discount to make it worthwhile and if it reduces churn by even .5%, it's probably close to revenue neutral, depending on how many people take advantage of the offer.

So if Netflix did make the decision to do this, when should it start? With the ad-supported plan launching in November and the crush of new content hitting the service throughout December, there is no reason to do anything before Q1 2023. But given that the streaming version of Netflix launched on January 6th, 2016, the company could tie the temporary annual discount to the anniversary, promoting it as a month-long "thank you" to all of its subscribers. 

Thanks to upcoming increases from streaming rivals such as Disney+, Netflix's overall price structure falls closer into the industry average. Offering a temporary annual rate is a good way to remind people of the overall value of the service.

THE BEST TV COOKING SEGMENTS THAT AREN'T ON TELEVISION
Andrew Zimmern is a very familiar face to television viewers and while he's starred in a number of successful food-oriented shows, I don't recall one where he primarily just stood in a kitchen and cooked. 

But like a lot of people in 2022, Zimmern has a Substack and his Spilled Milk newsletter includes everything from tips on where to eat in various cities to cooking segments like this one, in which he shows viewers how to make the perfect fried chicken. It's amazing to me that one of the streamers hasn't hired him to do these super-informative, kinda casual segments. And given that he is also very passionate about food sustainability and other industry issues, it feels as if there is place for Zimmern's very distinctive approach to food. Maybe it's because we both live in the Twin Cities, but he has always come across on camera as much more accessible and truthful than many of his superstar TV chef counterparts. 

And as a contrast, check out the made-for-Roku shows from Emeril Lagasse or Martha Stewart. Yes, they are well-known commodities, but particularly in the case of Emeril, you can practically see him mentally cashing the checks as he sleepwalks through the episodes.

THE TRANSFERRABLE SUBSIDY SCAM
Pat Garafolo's Boondoggle newsletter is one of my favorites and today the topic was state subsidies for things like TV and music production. As he notes, some states allow producers to "sell off" unused tax credits, which isn't at all what legislators or even the public intended. But it does allow TV and Film boards to brag about the amount of subsidies being used. Even though they might not be used for their intended purpose:

Here are some concrete examples to make this less abstract. Illinois’ film/TV tax credit program is transferable, so film and TV production companies that receive funds from it but don’t really pay that much in taxes simply sell their credits on to a whole host of non-film related corporations, including Heinz, Apple, and Walmart. Public money meant to subsidize film production in Illinois instead subsidizes dominant retailers, tech corporations, and food corporations because of that one little word, “transferable.”

In New Jersey, insurance corporations buy up film tax credits and other corporate subsidies, including those provided under a program meant to reduce food deserts, and use them to lower their insurance tax liabilities, which is a tax levied on the sale of insurance products in the state. That means economic development programs are subsidizing a cut on corporate insurance taxes, for no good reason at all, other than some lobbyist or lawmaker wanted it that way.

This strikes me as the kind of story that one of the Hollywood trades should be pursuing. Except for the fact that it's one of those open secrets the industry would prefer that no one discuss publicly.

ODDS AND SODS
* Amazon has ordered a Sausage Party TV series from Seth Rogen and Evan Goldberg.

* Based on the graphic novel of the same name by Santiago García and Luis Bustos, HBO Max will premiere the six-episode series Garcia! on Friday, October 28th.

* Roku has picked up the TBS series Chad after it was canceled by the cable network earlier this year as part of that channel's move away from scripted programming.

* The fourth and final season of the M. Night Shyamalan series Servant will premiere on Friday, January 13th, 2023.

TWEET OF THE DAY

WHAT'S NEW FOR WEDNESDAY:

Here's a quick rundown of all the new stuff premiering today on TV and streaming:

A Tree of Life: The Pittsburgh Synagogue Shooting (HBO)
Earthstorm (Netflix)
Fugitive: The Curious Case of Carlos Ghosn (Netflix)
Hellhole (Netflix)
Nova: Ocean Invaders (PBS)
Property Brothers: Forever Home Season Premiere (HGTV)
Robbing Mussolini (Netflix)
Sherman's Showcase Season Two Premiere (IFC)
Sumo Do, Sumo Don't (Disney+)
Tales Of The Jedi Series Premiere (Disney+)
The Good Nurse (Netflix)
The Mysterious Benedict Society Season Two Premiere (Disney+)

Click Here to see the list of all of the upcoming premiere dates for the next few months.

SEE YOU THURSDAY!

If you have any feedback, send it along to Rick@AllYourScreens.com and follow me on Twitter @aysrick.