Earlier this week, Netflix released its third quarter financial results.  In his letter to the shareholders and the rest of the world, CEO Reed Hastings, states "Our over-forecast in the US for Q3 was due to slightly higher-than-expected involuntary churn (inability to collect), which we believe was driven in part by the ongoing transition to chip-based credit and debit cards." 

NOW WAIT A SECOND MISTER!  Did he just say they missed their subscriber forecast growth because of the EMV transition?  That the card companies changed the numbers on him so he can't collect? Are you trying to sell me a "Clean Diesel" Volkswagen too?  Who do you think you are, Martin Winterkorn?  It took us years to sniff out the Clean Diesel thing, but Reed Hastings we are onto you. Issuing EMV cards didn't just happen in the last three months.  It's not something the financial services industry cooked up to mess with Netflix.  It has been an ongoing event in the U.S. since 2012 and has been heavily covered in the news for the last 6 months. 

Issuing of EMV cards will continue to be an "event" through 2018.  On a personal level, I have received new EMV cards this year from Chase, Citi, American Express, and Bank of America and let me tell you that none of the card numbers changed.  The major credit and debit cards issuers are taken painstaking efforts to make sure things like this don't happen - if they lose a recurring bill it affects their bottom line too.  Also, why hasn't any other major subscription service complained.  My subscriptions to Sirius XM, Pandora, Hulu Plus and my local health club haven't complained.  So what's up?

I think it may have more to do with Netflix losing Epix Movies to Hulu.

So Reed, I think it's time to come clean and 'fess up before you walk the plank with Mr. Winterkorn...    


About Michael Moeser

Michael heads Javelin's payments practice. He advises clients on the rapidly changing payments industry. Michael is focused on tracking the evolution of the payments industry, covering specific areas such as person-to-person payments, U.S. and global EMV card migration, digital wallets, merchant acceptance of different payment forms, cross-border payments, real-time transactions, and digital payments.

Michael specializes in assisting clients in developing new payment products or repositioning existing services to capitalize on market opportunities, understanding how to market to particular consumer and small business market segments, and developing new corporate strategies that can transform an existing payments franchise.

Michael brings over 20 years of experience from the payments and consulting industries. Before joining Javelin, he led the international small business card portfolio at Visa, launching new and growing existing debit and credit card programs with banks and financial services companies across the globe. Previously, he was the Head of Competitive Intelligence at Capital One, a Payments Knowledge Expert at McKinsey’s Payments Practice, and the Head of Product Marketing at Ondot Systems, a Silicon Valley mobile card control startup. He has presented to audiences around the globe, primarily at Visa and McKinsey client and public audiences.

Michael holds a BBA in finance from the Ross School of Business at the University of Michigan and an MBA in marketing and entrepreneurship from the Kellstadt Graduate School of Business at DePaul University.

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