Nobody likes a price hike; from a monthly water bill, tax rate, college’s tuition fee down to the smallest centavo increase, people are taking it personally. So when Netflix announces that it will jack up its prices from a dollar to two dollars a month, customers began to express disgust on social media.
An increase for a dollar or two is still a reason for Netflix’s subscribes to get offended. Others call it the end of the golden age of streaming.
The streaming service sent emails this week to US subscribers about a price hike that starts in their next billing cycle. Netflix (NFLX) announced regarding the increase earlier this year. It’s an increase which some Netflix customers have already seen since the time the company opened up to the public that it will add more television shows and movies on their streaming content. What the customers didn’t know is, Netflix, has been planning the price hike over the last few months of 2018 based on billing cycles.
The recent email to subscribers is a simple reminder that each of Netflix’s plans in the United States will increase 1 dollar to two dollars. It also included in the notification that the price of the basic program will rise from $8 to $9 per month, while the standard plan which offers HD streaming on two devices will cost from $11 to $13, and the premium will go up from $14 to $16. These prices deem to be expensive for individuals who have other monthly bills to pay.
What transpires Netflix’s prices to go higher despite the risk of losing some customers?
Some say that change is the only constant thing; what stays the same for an extended period is afraid of growth. In the case of Netflix, the need for change is inevitable to support the increasing momentum of the streaming service.
Back in 2017, DigitalTrends reported that Netflix spent six billion dollars on original content, and in 2018, the number increased by 8 billion dollars. However, according to Forbes, that number was updated into 13 billion dollars halfway through the year, which can be seen as a massive amount of money all in service of producing about 82 films and over 700 TV Shows. This alone put the world’s most popular streaming service into deep debt.
Thirteen billion dollars is a considerable sum, and new Netflix subscribers alone cannot fill the bucket, even its investors. Although the company is in debt, investors aren’t backing up because the streaming service has increased its subscribers ever since its opening.
So what Netflix decides to do now is to hike up its prices mainly to:
Give us more high-quality movies and TV shows – Netflix is independent, meaning to say that no foreign sponsors or large companies will save it from doom once the streaming service gets bankrupt. And going up against some of the most potent entertainment conglomerates in the world costs bucks. Where’s that money supposed to come from? It is basically from your own money; the loyal customers who continue to subscribe since day one.
To produce another high-quality show like Roma which secured an Oscar Nomination for Best Picture, Netflix needs money. It has also invested heavily on original content which costs 8 billion dollars for new shows and movies in 2018. The company’s hard work paid off when it won three Academy Awards and 23 Emmys for its great shows like Stranger Things, and Glow.
Not to turn into the traditional revenue source everybody hates; the ads. Ad-free content is what most Netflix crave and wish for. Unlike other streaming channels like HBO, it has to depend on its paid advertisement to gain profit, but people nowadays consider these commercials to be less tolerable. However, Netflix did not follow its predecessors, and that’s what attracts most of the customers and put the company into the number one spot for the top streaming services in the country.
Although Netflix will be facing several new competitors this 2019 including Apple’s TV+, a streaming service that will feature original content, Disney, NBCUniversal, and WarnerMedia – all plan to launch streaming services this year too. However, existing customers are still willing to pay for the increase prices although other companies will eventually offer the same services. As long as the company provides a wide range of accessible content, there’s nothing wrong in opening your wallet and add a little extra dollar. I think we can trust that Netflix will use our money wisely.