Netflix increasing price again
Netflix today announced price increases for US subscribers. It raised its standard plan by $14 per month, and its premium tier by $18 per month.
Standard plan pricing has been updated by $13 per month. Premium tier pricing will see a $2 price increase of $16 per month. New subscribers will have to pay the updated monthly fees, while current subscribers will see the new prices over the next few weeks as they roll out with customer’s billing cycles.
Industry insiders had predicted a new round of price rises at Netflix. This app recently increased its subscription fees in the United States, but this was in January 2019. Netflix recently increased the price of certain plans in Canada. Netflix rolls out price changes on a country-by-country basis and the change “in the US does not influence or indicate a global price change,” a Netflix spokesperson told The Verge.
The price hikes also arrive at a time when people have more options for entertainment than ever before especially in the United States. A few years ago, Netflix’s biggest competition in the streaming space was Hulu, and the company vied for people’s attention being split playing video games, watching YouTube, and sleeping. The US now has HBO Max and Disney Plus, Peacock and TikTok as well as YouTube, Twitch, Twitch, Fortnite, Twitch, Twitch, Twitch, Twitch, Twitch, Twitch, Disney Plus, Disney Plus, TikTok, YouTube, Twitch and YouTube. And sleep is still a factor. Netflix is aware. Prices are being updated “so that we can continue to offer more variety of TV shows and films,” a spokesperson told The Verge.
What does the spokesperson say when Netflix increasing price?
“As always we offer a range of plans so that people can pick a price that works best for their budget,” the spokesperson added.
These price increases are also due to Netflix’s desire to invest more in its product features and content. Over the past seven years, Netflix has increased its annual content budget by an average of $18.5 billion every year. However, this may have changed due to the pandemic. Netflix has to be more competitive in order to have quality content, and lots of it. It also needs to work harder to improve the platform. This costs money and can lead to price increases.
Questions about price hikes came up during Netflix’s most recent earnings call this month. Greg Peters, Netflix’s chief operating officer and chief product officer, said that as the company invests more into both content and tech developments, they’ll “occasionally go back and ask [customers] to pay a little bit more to keep that virtuous cycle of investment and value creation going.” Although Netflix is not influenced by competitor pricing, according to a person familiar with the matter, its new standard price is just $1 less than HBO Max’s $15 a month charge — a fee that many analysts claimed was too high for consumers.
What does Ross Benes a Netflix analyst say?
Ross Benes (an analyst covering Netflix for eMarketer) stated that Netflix is still very expensive at the time. He added that people get “a lot of value for not a whole lot of money.” It’s because of all these different factors, and with Netflix becoming an even more central streaming service in people’s lives during the pandemic, that Netflix could ask for an extra dollar a month and people would pay.
“Some people might cancel, but I bet it would pay off for them,” Benes added.
Netflix executives like co-CEO Reed Hastings have also made peace with losing some customers — something the industry refers to as churn. Hastings told analysts during the company’s second quarter earnings call in July that people might leave Netflix from time to time to subscribe to other streamers. The goal, however, was to “have so many hits that you know when you come to Netflix you can just go from hit to hit to hit and never have to think about any of those other services.” Creating that constant series of hits that convinces people to sign up and stay gets expensive — fast — and that’s in part where price hikes come in.
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