Netflix Increases its Prices: Is it Worth It?
By Leila Gabrys
It’s no argument that Netflix has been delivering exceptional entertainment to its subscribers in the past couple of years. However, the price of the standard subscription to Netflix increased from $9.99 per month up to $10.99 in November of this year. This is mainly because the multi-billion dollar industry plans to release dozens of new shows in 2018. This is a main factor of the increase in demand by most subscribers. Though slightly annoying to subscribers, people, including my family, are still very willing to add on their extra dollar every month to be able to binge this new content. The hype that hit shows such as Stranger Things and 13 Reasons Why have brought to Netflix’s reputation has definitely set the stakes high for other video streaming companies to match.
This is not the first time the company has increased its subscription price. In 2011, the company chose to up their price from $9.99 to $16, which provided the packaged deal of the standard shipping of DVDs in the mail and the online streaming. This being a 60% increase in the price led to a total loss of 800,000 subscribers, stalling their economic growth, according to the Huffington Post. In 2015, Netflix also upped its lowered price of the standard $7.99 to the current price of $9.99.
However, Netflix has discovered newer ways of providing entertainment: by producing shows itself. 2016 was one of Netflix’s biggest years, as it released the first season of the hit show Stranger Things (seen above) and the second season of Narcos. The company gained 3.6 million subscribers and a record of $2.15 billion in revenue the third quarter, just after the release of these two shows. "Stranger Things is also notable as it is produced and owned by Netflix, which provides us with more attractive economics and greater business and creative control," says the company, according to The Verge. Netflix used this strategy of creating more original shows this past year, including 13 Reasons Why and The Crown, and plans to continue with it throughout 2018.
Because of the increase in upcoming content this next year, it’s no surprise that Netflix is upping the price to expand their budget. Sandra Gonzales via Twitter writes, “Ted Sarandos says Netflix's content budget will be "closer to $7 billion" next year.” It’s in the news that the company strategically planned their up in price to be in effect just before the release of the sophomore season of Stranger Things on October 27th. The recent final trailer has most people on the edge of their seats, itching to binge the new content fans have been waiting for for a year and a half. Planning to the up the price just before the release is a clever idea to squeeze the cash out of people’s pockets. The newer features have also been a factor in the cost of a standard subscription, such as downloads and interactive content, according to Mashable. However, not even these great features and extraordinary shows and movies can keep everyone a loyal Netflix binger. The up in the price causes competition with other video streaming services such as Amazon's Prime Video and HBO Now, which offer different shows and features. However, most people don’t need to think about this opportunity cost too much before deciding the Netflix arguably delivers the best and most exclusive content as a whole.
Netflix began informing its subscribers on October 19th of the increase, just 30 days in advance before the price actually goes up, according to their billing cycle. In their third quarter, Netflix reported having 109.25 million subscribers, which we may see a change in due to this increase. However, if Netflix continues to live up to their extremely high reputation and deliver exceptional shows, the company will see increase in profit, and therefore, hopefully an increase in subscribers.
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