Netflix is Raising Its Prices, Again (mashable.com)

Jason Abbruzzese, writing for Mashable: Get ready to pay just a bit more for your Netflix subscription. The streaming video service will be raising prices on its middle and top tier plans in the U.S. starting in November. Subscribers who currently pay for the standard $9.99 service will be charged $10.99. The price of the premium tier will rise from $11.99 to $13.99. Good news for people on the basic $7.99 plan -- that price is staying put, for now. The U.S.-only price hikes will begin to go into effect in November, varying depending on individuals' billing cycles. Starting on Oct. 19, subscribers will be notified and given at least 30 days notice about the increase.

Comments

Still better than cable

[Anonymous Coward]

Our family has the highest tier subscription, so that at any given time any of the 4 in our home can watch what they please. We're in Canada, and even though supposedly NF here is not "as good as" the USA, we're satisfied and find plenty to watch. It's still cheaper than cable, still ad-free, and makes us happy. No complaints from our four walls.

Re:Still better than cable

[Zephyn]

Word to the wise: If it asks you to download drivers for a Neurotoxin emitter, don't authorize it.

Less streaming content and higher price?

[blahbooboo]

So let me get this straight, they've already lost a lot of non-Netflix created content, will lose Disney in 2019, and now they're raising the price?

Re:Less streaming content and higher price?

[wardrich86]

And thus, they will end up destroying the only reason they (the brancher-offers) were getting money... and we'll wind up all going back to piracy. Things will end up so segmented that we'll be paying cable-level pricing to get access to 50 different streaming services. Fuck that.

Re:Less streaming content and higher price?

[squiggleslash]

Yup. Netflix is loss making, so the idea they might still need to raise prices while they offer a slightly worse service is not contradictory. The question is whether people are willing to pay more.

My guess is yes. But I suspect Netflix would be more successful if they added as much content as possible and doubled their prices, rather than doing what they're doing. It's better to get people the product they want to pay for, and charge them what it costs, than to offer something half assed.

Re:Less streaming content and higher price?

[Anubis IV]

Yup, but it shouldn't come as a surprise, nor is it necessarily something to get worked up over.

Netflix was considered an upstart company for a long time, with most of the studios and networks not recognizing how disruptive it would eventually become. As such, Netflix was viewed as yet another way to profit from back catalogs that otherwise weren't providing much value to their owners, so Netflix was able to secure a number of multiyear licenses from major organizations (e.g. Starz) for little more than a pittance. Fast forward 10 years and everyone has woken up to the fact that Netflix poses a major threat to the very foundations of the traditional television business model. They aren't willing to give away licenses to their old content for cheap, nor are they so willing to license recent stuff without ensuring that they receive hefty compensation.

In response, Netflix only has two options: raise prices or reduce their catalog, and they've done both to varying degrees.

What I've noticed recently is that Netflix seems to be procuring short-term licenses for big-name films, that way people can watch them as they hit the various services, but that these licenses seem to expire after a few months. Doing it that way lets the vast majority of people who were interested in that film watch it, without forcing Netflix to raise prices in order to keep those big-name films in their library in perpetuity. Likewise, they let older items expire, but most of them seem to return again a year or two later, as if at any given time Netflix wants their library to have about X items in it, but they renew licenses in a round robin fashion so that people have an opportunity to actually watch more than X items.

For me, even with the price hike, it's still a great value proposition. With dozens of items currently in my queue and more being added on a regular basis, it may not have any particular thing I want to see at any given time, but it always has enough things I want to see that I'm never lacking for entertainment.

Re: Less streaming content and higher price?

[spire3661]

You need Win10(fully patched and current) + a Z270 motherboard AND a Kaby Lake processor to get the full Netflix experience on PC.

Re:Less streaming content and higher price?

[nine-times]

My guess is yes. But I suspect Netflix would be more successful if they added as much content as possible and doubled their prices

It's not clear that they have that option. Content owners have been playing games with licensing for years, and if one thing is clear, it's that they don't want you to be able to subscribe to one service where you can get all (or "enough") of the content you want under one roof.

This is what's going on:

Company #1 has 5 pieces of content, which are A, B, C, D, and E. Company #2 have 5 pieces of content, which are V, W, X, Y, and Z. So Amazon licenses A, B, V, W, and X. Netflix licenses A, C, D, V, and X. Hulu licenses A, B, E, W, and Y. Everyone involved knows that you, the consumer, want all 10 pieces of content, so they're trying to get you to subscribe to Netflix, Hulu, and Amazon. Plus, you'll notice that only gets you A, B, C, D, E, V, W, and X. To get Z, you still have to buy it or pay for cable.

And part of this whole scheme is that they're intentionally getting you to pay for each piece of content several times over. They justify their pricing because of all the content they have, even though there's an awful lot of overlap.

And that's why content owners are never going to let Netflix have anything resembling a "complete library" of content. If they do that, then you'll only pay for that content once, and you'll be paying Netflix. Netflix will set the price and the terms. If they play a lot of games with exclusivity, then they can play the distribution channels off of each other, and get consumers to pay for most shows several times.

Re:No way to win.

[BorgDrone]

Of course there is a way to win.

We want to subscribe to one service and get all content, we don't need (or want) that content to be exclusive to that service.

So the solution is simple, forbid exclusivity and require content creators to provide their content to all services under identical terms. Then you have multiple services to choose from and all services can offer all content (if they want).

Good for Netflix

[JohnFen]

...but screw Netflix. I am not going to support one of the three companies who were the primary forces behind making the EME part of the HTML5 standard.

Re:Premium subsidizing basic?

[DarkOx]

Its called price discrimination. You create tiered offerings because you want to get charge the people the most who are willing to pay the most, while not being forced to turn away still profitable but lower contribution margin business.

If you don't like it the correct way to protest is go down to the 7.99 tier. That is how you tell NetFlix you like the service overall but don't place the same premium on premium service that they do. If enough people do it; the result will be they either raise rates on the bottom tier to hit the revenue goals while making a perhaps slightly cheaper premium tier seem like a better decision at the margin for consumers, or go back to a single class of service.

Netflix library is fickle

[sremick]

When they stop removing as much as they add month to month, maybe I'll start caring about Netflix. Until then, I'll stick with Plex. Stuff doesn't disappear there unless I want it to go away.

You'd think Netflix has a limited number of hard drives or something and has to shuffle things around to manage space (I know it's a licensing thing, but it's still bullshit).

Compared to inflation

[Solandri]

Netflix introduced the unlimited streaming plan at $7.99 in July 2011. (Their current $7.99 plan doesn't stream in HD, so the $9.99 soon to be $10.99 plan corresponds to their original $7.99 plan.)

$7.99 in July 2011 is equivalent to $8.68 today.

So bumping it up to $10.99 means it's increased by 1.27x the rate of inflation. Or an average annual increase of 5.5% vs the actual annual CPI inflation rate of 1.4% over the last 6 years.

Re:Compared to inflation

[QuietLagoon]

...So bumping it up to $10.99 means it's increased by 1.27x the rate of inflation...

Good analysis. Also, when I look at your analysis, I note that the Netflix library is becoming a shadow of what it had been. That makes the 1.27 times inflation number look even worse. Paying more money, and getting less product.

Counter-intuative

[JBMcB]

And movie companies forget the lesson of VHS over and over and over again.

Make stuff cheap. Sell it to everybody. Make tons of money.

I worked at a video store when VHS movies were initially $80 a copy for a few months, then went down to $25. This was purely to get money from the video rental stores.

Then Jurassic Park came out on VHS, and Spielberg had the brilliant idea to sell it for $20 right off the bat. Almost made the same amount of money that ticket sales made. Instead of selling a couple of million copies for $80 a pop, they sold ten million copies at $20.

It's almost as if there are demand/price curves that determine these things.