The Times notes that Netflix intends to spend a whopping $18.6 billion on content. The emotional charge that its 58 million US and 130 million worldwide subscribers get from the service is far more valuable than the price they pay - which is a relatively small proportion of its subscribers' income.Ĭonsumer loyalty depends on having the right content - and that costs money. In the language of economics, Netflix's service is relatively price-inelastic. The $8 a month plan will now cost $9, and the high-end version, which allows for four simultaneous streams, jumps to $16 from $14. Still, it’s cheaper than HBO, whose streaming service costs about $15 a month. Netflix’s most popular plan, which gives a customer two simultaneous streams, will get the largest increase, to $13 a month from $11. Indeed Netflix's new prices are below those of rivals. And consulting firm Magid believes consumers are willing to pay $38 per month for all their streaming services - "which could mean Netflix’s price increases will prompt consumers end their subscriptions to other services," according to Variety. Netflix users found that 71% felt content on the service has improved. How so? A November Piper Jaffray survey of about 1,100 U.S. With improved service quality, consumers might stick with Netflix and dump other services. told Variety, “We don’t believe that will slow subscriber growth, as the new price points remain competitive relative to Netflix’s volume of original and licensed content." Neil Begley, SVP at credit rating firm Moody’s. According to Variety, analysts expect Netflix's revenues to rise by about $1 billion this year due to rate hikes. Indeed, investors and ratings agencies don't expect a mass exodus of subscribers. To keep such customers from canceling, Netflix paid AT&T Time Warner - which owns the show - $100 million to keep the show through 2019, according to the Times. That's the biggest increase since Netflix launched its online streaming service, according to the New York Times.īut the price increase is not likely to send floods of consumers canceling their Netflix - primarily because they are hooked on watching it.Ī case in point is a consumer who said that she subscribes to Netflix solely to watch Friends reruns. 14 for new subscribers Netflix raised its prices in the range of 13% to 18%. Apple and Disney are also rumored to debut streaming services this year.This comes to mind in considering the news that effective Jan. This price jump will ostensibly help Netflix while it burns through it 2019 budget, one that is set to include roughly 90 original movies and even more original shows, and might help it recoup costs from an astounding $100 million deal to keep Friends on the service. It also dovetails with news of a new streaming service from NBCUniversal, which owns the rights to Netflix’s most popular show, The Office. In a statement a representative said: “We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience.” Netflix reported last fall that it hit 58 million subscribers in the U.S., and has close to 79 million outside the States. The prices are in effect for new subscribers, and will start changing for existing customers over the next few months. The last subscriber increase came in 2017, when the most popular plan went up by a dollar. The premium 4K plan will go up to $16, while the basic plan, which has long held at $8 a month, will go up to $9. The standard HD plan will change from $11 to $13, and marks the biggest price hike in the company’s history. subscription plans again, with its most popular plan jumping to $13 a month. Netflix has bumped up the price of its U.S.
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