Netflix has once again announced that it will soon increase its subscription prices, a decision that’s causing a stir among its users. For many, this price hike feels like yet another financial burden on the already expensive cost of streaming subscriptions. With rising costs across its subscription tiers, Netflix is betting that users will stay loyal despite a growing list of streaming alternatives. So, what does this change mean for everyday subscribers, and how does Netflix justify this move?
To understand the need for a price increase, we have to look at Netflix’s growing investment in original content. The platform has been spending more of its resources producing a range of exclusive films and series, known to users as “Netflix Originals.” This strategy has proven successful, attracting millions of viewers globally to hit shows like Outer Banks, Squid Game, and most recently, Monsters: The Lyle and Erik Menendez Story, a documentary about the 1989 murders of José and Kitty Menendez by their two sons in Beverly Hills. Although they’ve had their fair share of flops, notably Girlboss and Heart of Invictus, Netflix Originals’ strong viewership numbers offset these occasional misses.
In fact, Netflix spent over $17 billion on producing content in 2022 alone. This substantial investment in production comes with a cost, and that cost is increasingly being passed on to subscribers.
Here at Arcadia High School, the company’s latest changes haven’t gone unnoticed. “I’m tired of paying more. They never seem to be satisfied,” says sophomore David Lee.
In addition to content spending, Netflix’s move to crack down on password sharing has also influenced its pricing strategy. The company estimates that password sharing has impacted its revenue, with over 100 million households estimated to share accounts globally. By limiting this practice, using information such as IP addresses and whether or not a device is associated with a household, Netflix aims to recover potential revenue.
The last time Netflix increased prices was in January 2022. Premium plan subscriptions were started at $22.99 per month, reflecting a $3 increase. Netflix’s entry-level, ad-supported plan (its least expensive option) remained at $6.99, and the Standard tier plan (with no ads) increased by $1.50 to $15.49.
The immediate impact of these prices will be on consumers’ wallets. While the ad-supported plan is cheaper, it hasn’t gained traction among users who prefer uninterrupted viewing, making it an outdated option for those seeking a seamless experience.
Netflix’s price hikes are a gamble, particularly as the streaming industry continues to expand with competitors. For those already feeling subscription fatigue, these price changes might push them to consider canceling or downgrading their subscriptions. Surveys indicate that about 25% of subscribers consider canceling or reducing their subscriptions when prices go up. This trend, called “churning,” refers to the act of switching between services continuously to get the best deals and content, suggesting that price sensitivity among streaming users is on the rise as competitors continue to gain ground with their own original content offerings. A Disney+ Premium subscription starts at $15.99, $7 less than Netflix and Prime Video is included with Amazon Prime.
Another sophomore, Zeming “John” Huang added, “I don’t know why they think the constant price hikes won’t push people away.” This sentiment is common, especially as students and families face the choice between keeping their subscriptions or looking for cheaper alternatives.
Netflix’s future lies in its ability to balance quality with cost. Since its founding in 1997, Netflix has evolved from a DVD rental service to the leader in streaming, estimated at $320 billion. The platform’s innovations have consistently redefined entertainment, and its vast library of content remains its top selling point. However, with ongoing price increases, it’s possible that Netflix will need to find other ways to keep users subscribed amid these new changes.
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