![]() ![]() The emotional charge that its 58 million US and 130 million worldwide subscribers get from the service is far more valuable than the price they pay - which is a relatively small proportion of its subscribers' income.Ĭonsumer loyalty depends on having the right content - and that costs money. In the language of economics, Netflix's service is relatively price-inelastic. The $8 a month plan will now cost $9, and the high-end version, which allows for four simultaneous streams, jumps to $16 from $14. Still, it’s cheaper than HBO, whose streaming service costs about $15 a month. Netflix’s most popular plan, which gives a customer two simultaneous streams, will get the largest increase, to $13 a month from $11. Indeed Netflix's new prices are below those of rivals. And consulting firm Magid believes consumers are willing to pay $38 per month for all their streaming services - "which could mean Netflix’s price increases will prompt consumers end their subscriptions to other services," according to Variety. Netflix users found that 71% felt content on the service has improved. How so? A November Piper Jaffray survey of about 1,100 U.S. With improved service quality, consumers might stick with Netflix and dump other services. told Variety, “We don’t believe that will slow subscriber growth, as the new price points remain competitive relative to Netflix’s volume of original and licensed content." Neil Begley, SVP at credit rating firm Moody’s. According to Variety, analysts expect Netflix's revenues to rise by about $1 billion this year due to rate hikes. Indeed, investors and ratings agencies don't expect a mass exodus of subscribers. To keep such customers from canceling, Netflix paid AT&T Time Warner - which owns the show - $100 million to keep the show through 2019, according to the Times. That's the biggest increase since Netflix launched its online streaming service, according to the New York Times.īut the price increase is not likely to send floods of consumers canceling their Netflix - primarily because they are hooked on watching it.Ī case in point is a consumer who said that she subscribes to Netflix solely to watch Friends reruns. 14 for new subscribers Netflix raised its prices in the range of 13% to 18%. This comes to mind in considering the news that effective Jan.
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