Netflix is raising its prices again. And while many customers will throw their hands in the air, the question remains whether the service will actually lose subscribers. The announcement comes at a time when the service is still facing controversy over the film Cuties and following an announcement that the company would no longer allow for trial periods.
The actual price hike amounts to $24.00 per year. Is that a lot? If you are a microsaver it might be, but we are willing to believe that $2.00 a month could easily be swallowed up on something else that is not as consequential as a mortgage or car bill. But the combination of a rate hike, stress over a shaky world, impending holiday gifts, and even the pull of other services may cost it some subscribers who have been getting frustrated with the selection quality. The bet is always that the loss of subscribers will pale in comparison to the money made from all the ones who keep it and pay more. Investors rewarded the company with a higher stock price today.
Nothing will ever hit Netflix like the shock customers felt when the service stopped including DVD’s in its lower-cost packages paired with the announced Quickster idea that was scrapped faster than new Coke. But during this tough economic time which has been a real calamity for some families the mere idea of an extra dollar or two out the door will have a psychological effect bigger than the financial one. It will engender a sort of “What’s Next” response. And while stockholders will be happy most of us don’t own stock.
The impetus behind the hike seems to be the need for more capital in order to produce original content. And few can argue that original content is not driving the service now with shows like Stranger Things, the upcoming Kobra Kai season 3 and original movies like the Old Guard pulling in huge audiences. It almost has no choice with other studios pulling content for their own services. So this is where it is. Netflix now has to be as good or better than HBO and major premium services. Because it costs more than all of them and more than 3 services from Disney combined.
We will keep an eye on this one.