After spreading across the globe, Netflix has figured out a formula for making real money. There are lessons for the rest of tech.
Heading into its earnings report on Wednesday, the company’s shares had fallen by nearly a third over the past three months. Investors have been increasingly worried about Netflix’s future profitability and its ability to retain subscribers.
It starts with pricing power. Effective immediately, Netflix raised the U.S. monthly price of its Premium plan to $22.99 from $19.99 and its Basic plan to $11.99 from $9.99. I would expect more price hikes going forward, which will be an ongoing boost to profits. He noted the expansion of Netflix’s operating profit margin from 4% in 2016 to 20% today. It’s hard to argue with that kind of progress.
Gelsinger, who became chief executive of Intel in 2021, has been openly critical of U.S. industrial policy of the past 30 years, which allowed the export of U.S. manufacturing to Asia. First, the U.S. needs to move faster in disbursing the Chips Act money and funding science research. He said Europe may hand out subsidies sooner than the U.S., even though the European Union’s own Chips Act passed a year later.
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