Netflix’s most recent price increase came in the 4th Quarter of 2017 – could the company be poised to raise them again? According to Wall St. analysts, the streaming giant would be well within their right. While nothing has been explicitly stated or hinted at by the company, analysts believe that Netflix is currently in position to raise their rates – a conclusion that is generally accepted by most investors who expect revenue from the raised rates to be invested back into the company to help fund their ever-growing library of original content.
In a survey conducted by the firm Piper Jaffray, of 1,100 Netflix subscribers, it was found that 71% feel that the streaming service’s content has improved. This, according to the firm, would put the company in position to raise subscription rates periodically, stating:
“We believe, as long as the vast majority of subscribers perceive that the service is improving, Netflix will be positioned to periodically increase price… Oscar nominations for upcoming Netflix films would, no doubt, have a favorable impact on existing and potential subscribers’ view of the content being made available to them,”
As mentioned in the statement, any nominations or victories during award season would immediately add value to their service. Currently, Netflix plans limited theatrical runs in New York, Los Angeles, and other major cities for three films, including: Roma, The Ballad of Buster Scruggs, and Bird Box – directed by Alfonso Cuarón, The Coen Bros., and Susanne Bier, respectively and featuring star power such as James Franco and Liam Neeson (The Ballad of Buster Scruggs) as well as Sandra Bullock and John Malkovich (Bird Box).
In early October Netflix Chief Product Officer, Greg Peters, mentioned that the company has considered the idea of a slight price hike:
“We earn the right to increase price a bit and then we take that new revenue, invested back into the model and that sort of continuous positive cycle we get to keep going, and we foresee that that will keep going for many years in the future.”
The sentiment being: so long as subscribers are happy and see increasing value in Netflix’s service, they won’t mind the periodical increase in price which would then be re-invested into new content to keep them happy in the future.
A major question now looming over Netflix, though, is how high can you risk going when Disney is planning on offering their new streaming service (Disney+) at an even lower price than the current Netflix rates? At what point will subscribers no longer see the value in your service because of the greater value in another? This is something that Netflix must learn as they ready themselves for the juggernaught that we all assume Disney+ will be.