Are you willing to pay more for a streaming service with continuous original content? Netflix is betting the answer is yes.
Subscribers in the United States with either a standard or premium plan will be seeing their first rate hike since January 2019. The standard plan includes streaming on two screens and is the most popular plan with customers in the United States. The cost of the standard plan was $12.99. It will now be going up $1 to $13.99. The premium plan, which allows for streaming on four devices and includes 4K quality video, was $15.99. It will be going up $2 to $17.99.
The basic plan pricing, which allows for streaming on one screen at a time, will remain the same at $8.99.
Customers new to Netflix will already see the new price tiers. Existing subscribers will notice the increase appear during this next month’s billing cycle.
What does this mean for other countries? Canadians saw a price increase earlier this month. The company hasn’t announced an increase for any other markets as of yet. A spokesperson for Netflix told The Verge the US price change is not a sign there will be a global one.
In the timeline of Netflix rate hikes, this jump makes sense in terms of amount and timing. What’s unique about this particular instance is that this is 2020, which makes everything unique, and there has been a recent flood of options for streaming services.
Some people may think that the added competition would create a reason for Netflix to hold off on a price increase. Afterall, subscribers can now choose to ditch Netflix to see what HBO Max, Peacock, or Disney+ have on offer. Disney+ is cheaper than Netflix, with its plans starting at $6.99.
But Netflix isn’t here to build a brand on low pricing. They are here to impress viewers with more original content than anyone else.
“We understand people have more entertainment choices than ever and we’re committed to delivering an even better experience for our members,” Netflix said in statement. “We’re updating our prices so that we can continue to offer more variety of TV shows and films — in addition to our great fall lineup.”
Will fans pay a dollar or two more if they feel it helps bring them that next season of Cobra Kai? Netflix must understand there will be subscribers who choose to opt-out, but that the loss will be less than the gain in profits from the price increase.
How much money will Netflix stand to gain from this price hike? Alex Giaimo of Jefferies estimated that if Netflix raised their prices by $1 to $2 in either North America or Europe, the entertainment company could generate $500 million to $1 billion in 2021.
Those numbers may seem ridiculous to many of us who don’t toss millions around. For Netflix, this won’t be all the money they need to continue bringing fresh content. The company also relies on debt financing to keep its rush of content coming.
While some customers may wonder if Netflix really has that much more content than the other streaming services, the data actually does seem to hold true to Netflix’s reputation. Reelgood performed a study of content across services and found that only Amazon Prime Video has more movies and TV in their catalog, but that Netflix still has more original and well-rated content.
A look at what’s coming in November 2020 for streaming services shows that HBO Max and others are still adding a lot of great content, but much of it a seasoned binge-watcher has likely already seen.