Streaming giant Netflix hasn’t increased its pricing for Canadian customers that much over the past couple of years. But effective October 8, 2020, the company raised charges for standard and premium subscription plans. New sign-ups and existing clients are now paying more.
Netflix is capitalizing on the heat of the moment as theatres remain closed due to the pandemic. However, the hike in streaming services could be the revival of interest in the big screen. Cineplex (TSX:CGX) could benefit from this development. The entertainment stock could even soar when things return to normal.
New online company category
Netflix implemented the price increases both in the U.S. and Canada. For Netflix Canada, the following are the latest monthly subscription costs: $9.99 for basic (one screen); $14.99 for standard (two screens with HD available); and $18.99 for premium (four simultaneous screens with ultra HD available).
Meanwhile, Canada is preparing to amend its Broadcasting Act and establish a new “online company” category. The government aims to force video streaming giant Netflix and others like Amazon Prime and Disney+ to provide financial assistance to local content.
The new set of rules to regulate streaming services, including music, will roll out soon. Once in place, the government will have all the power to regulate all the big names in the streaming market. The streaming giants would also need to subsidize the development, production, and distribution of local entertainment and cultural content on their respective platforms.
Canada’s Heritage Minister Steven Guilbeault said, “We are asking these large and wealthy companies to invest in Canadian stories, Canadian music, in Canadian artists.” Aside from investing, the Trudeau administration is asking the rich companies to promote Canadian content.
The new rules will apply to Apple, Facebook, Spotify, YouTube, and local online companies on the music side. All these corporate giants will be under Canadian regulation. Thus far, Google and Netflix are unregulated in the country.
Cineplex is among the worst performers on the TSX. The year has been disastrous for Canada’s iconic entertainment and media company. Its shares are down 84.12% year to-date. The $338.83 million firm also lost its dividend aristocrat status after suspending dividend payouts following the coronavirus outbreak.
COVID-19 is ripping the entertainment culture apart. Even Hollywood bigwigs such as Walt Disney and Comcast’s Universal Pictures have second thoughts on movie theatres. Cineplex is hurting from potential blockbusters’ delayed playdates like MGM’s No Time to Die and Marvel’s Black Widow.
The flicks won’t come until April and May 2021, although the movie producers are selling the film to Apple or Netflix for their streaming services.
Friday the 13th
Social distancing and lack of blockbuster movies are ruining movie theatre operations. The bitter pill for Cineplex is that people are getting used to life without movie theatres. It will take a long time before customers feel safe again inside enclosed spaces, especially theatres and entertainment venues.
It’s ominous that Cineplex is reporting the 2020 third-quarter financial results on November 13, 2020, Friday the 13th. The results could be more shocking than the previous quarters, and the current share price of $5.35 could sink even further.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Christopher Liew has no position in any of the stocks mentioned. David Gardner owns shares of Alphabet (C shares), Amazon, Apple, Facebook, Netflix, and Walt Disney. Tom Gardner owns shares of Alphabet (C shares), Facebook, and Netflix. The Motley Fool owns shares of and recommends Alphabet (C shares), Amazon, Apple, Facebook, Netflix, Spotify Technology, and Walt Disney. The Motley Fool recommends Comcast and recommends the following options: long January 2021 $60 calls on Walt Disney, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short January 2021 $135 calls on Walt Disney.