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 Moeser advises clients on improving the payments experience by anticipating customer needs amid the changing landscape of banking and retail shopping. His areas of expertise include cards, checks, P2P payments, B2C transactions, remittances, faster payments, digital commerce, mobile wallets, and merchant acquisition.

Before joining Javelin, Michael held executive positions at Visa, McKinsey, Capital One, and Ondot Systems. He has given presentations at conferences such as NACHA Payments, BAI Beacon, Card Forum, Power of Prepaid, and Mobile Payments. Michael has been quoted in many publications, including Forbes, the Wall Street Journal, Financial Times, American Banker, Chicago Tribune, Bloomberg, and Washington Post.

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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