Netflix could be hiking up their prices fairly soon. Via Deadline, Wall Street analyst Alex Giaimo believes that a subscription price increase is likely to come in either North America or Europe.
In a note to his clients, Giaimo said that Netflix is considering “a potential hike” and that it is “probable in the near to midterm.” According to Giaimo, the streaming giant was not showing any inclination towards a price hike after their first quarter meetings. But, Giaimo says that the discussions about an increase in subscription fees after their second quarter were “more open-ended.”
A Netflix price hike should not come as the biggest surprise in the world. The streaming platform has done incredibly well in 2020. Granted, a significant portion of that success is in part due to the COVID-19 pandemic and subsequent lockdowns across the country.
The company added close to 26 million global subscribers in the first half of the year. This brought their overall subscriber number up to 193 million. All this in a year where other premium streaming services like Disney+, HBO Max, AppleTV+, and Peacock have all been fighting for supremacy. That shows the brand power Netflix holds over the streaming marketplace.
According to Giaimo, an increase of $1 to $2 a month in North America or Europe could generate $500 million to $1 billion in fiscal 2021 revenue. Giaimo believes that the European, Middle Eastern, and African markets are “most likely” to see this $1-$2 increase in their subscription pricing. This simple change could bring in “an incremental $700 million to 2021 revenue,” says Giaimo.
Would consumers be okay with the price increase? So far, Netflix seems to be holding stable with its U.S. subscriber base. Subscriptions have flattened in the States but the global market continues to show an increase in subscribers. It seems like the obvious tactic is to nab these newer global customers at an increased price rate. That way, as new customers, they will see the increased price of a subscription as a normal entry point fee, as opposed to current subscribers who will notice the increase in their bill.
Netflix continues to hold incredible sway over the streaming marketplace. When your product or service is considered a cornerstone of the industry, it can incentivize you to increase your price because you are coming from a position of power and dominance. At this point, even North American subscribers probably wouldn’t lose their minds over a $1-$2 increase. It seems inconsequential from a single subscriber’s viewpoint, but the large-scale ramifications of a decision could be extremely profitable.
We don’t know exactly when Netflix plans to increase its prices, but it is sounding like you can expect it to take place within the next year. With so many streaming options now available, maybe it is time for consumers to take an inventory of their subscription services and see which ones are still really worth it. Is Netflix still worth the price they want you to pay for it? Or is there a better option out there for you? Will Netflix always stay the same or could things change for the worse?