Six days. That's how long it took between Netflix jacking up its US and Canada prices and Netflix turning around and telling Wall Street that growth is basically stalling out.
Quick recap for anyone who missed the email: on January 14th, Netflix bumped the Standard plan to $15.49 a month, Premium went up to $19.99, and even Basic crept up a buck to $9.99. I got the notice, grumbled about it out loud to nobody in my kitchen for maybe four minutes, and then did absolutely nothing about it, because that's what everyone does. You complain, you don't cancel. Netflix knows this. It's basically the entire business model at this point.
Then this afternoon they dropped Q4 earnings and guided for something like 2.5 million new subscribers in Q1. Analysts were penciling in somewhere around 6 to 7 million. The stock was down over 20% in after-hours trading by the time I checked my phone around 7pm, which is a genuinely brutal number for a company that size in a single day.
I don't think the price hike and the weak guidance are as unrelated as the investor call made them sound. Reed Hastings and company spent a good chunk of the call talking about competition (HBO Max, Disney+, Apple TV+, Paramount+ launching soon under its new name) and COVID production delays, and sure, those are real. But you don't raise prices for the third time in two years right before flat quarters unless you're trying to squeeze more revenue out of a subscriber base you already suspect is about to stop growing. That's not some hot take, that's just what a public company does when the growth story runs out of road.
And look, I get it, streaming still isn't cable. I'm not about to write some nostalgic bit about the good old days of paying Comcast $140 a month for six hundred channels I never watched. But my household right now is paying for Netflix, the Disney/Hulu bundle, and HBO Max, and we still end up scrolling through three apps most nights before giving up and rewatching The Office, which is on Peacock now, which we don't even have. That's the actual lived experience of "peak TV" in January 2022, and I suspect a lot of people are quietly doing the math on their credit card statement the same way I am.
There's also the password-sharing thing hanging over all of this. Netflix has been publicly testing ways to charge people who share accounts outside their household, and every time a quarter like this happens, that idea gets a little more oxygen internally. I'd bet actual money we see a real crackdown rolled out sometime this year, not just quiet testing. When your subscriber growth engine sputters, "hey, about a fifth of our viewership isn't paying us directly" starts looking a lot more urgent to fix.
One small thing that bugged me reading through the shareholder letter: they keep leaning on total viewing hours and engagement numbers to argue the platform is healthier than the subscriber count suggests, and maybe that's true, but it's also exactly the kind of metric a company reaches for when the metric everyone actually cares about (net adds) stops cooperating. I've read enough of these letters over the years to recognize the tell.
None of this means Netflix is in trouble, not really, they still added over 8 million subscribers last quarter and they're still miles ahead of anyone else in the space. But the easy-growth phase of streaming, the one where you launch a service and just watch the numbers go up every quarter forever, looks like it's ending. Wall Street noticed today before most of us finished dinner.
Anyway. I'm keeping the Premium plan for now, mostly because we're two episodes from finishing the new season of Ozark and I'm not about to be the guy who cancels three days before the finale.