Netflix announced the biggest price increase in the history of the streaming service today, hiking prices on all three of its US plan tiers by between 13% and 18%. The most popular plan in the US, for example, will now cost $13 instead of $11, and there’s no great mystery why Netflix is doing this. The company needs an ever-growing pile of cash to fund the original shows and movies that make Netflix’s stable of exclusive content attractive enough to keep subscribers and entice new ones. That’s the whole ballgame.
Meanwhile, today’s price hike has also spurred an interesting Reddit thread that may give many subscribers pause as they consider how they feel about this. Reddit user SuchRush decided to ask a simple question: “How much could Netflix increase prices before you’d cancel?”
It’s definitely an interesting thought to ponder. The knee-jerk reaction, for example, might be to say that $20 per month is definitely the limit. Maybe $30. But as soon as you’ve said that and realize you’re saying no more Netflix at all from that point on — what are you leaving yourself with? Cable, seriously?
By way of responding to this thread, Reddit user thesnakeis chimed in with this: “Honestly they could double the price and I would gladly pay. They may lose content but I’ve always found something good to watch whenever I’m looking for it. Plus I think their original content has been pretty decent. Overall though it comes down to having no ads. I know in the past the CEO has been firmly against them and I want to support that policy. If that changes then I may have to reconsider.”
On the one hand, this is a totally academic exercise in the sense that there’s probably not a bright line representing the ceiling at which most subscribers will say to themselves — right, that’s the limit right there. Absolutely no higher than that point.
The truth of the matter, though, is that the limit is probably a bit fuzzy, and one that’s subject to change, which is what makes this so interesting to consider.
My humble prediction is that there is a pool of Netflix subscribers who either love the service or consider it superior to most of what else is out there. As we enter the world of peak subscription, however, those consumers are only going to be able to afford so much a month. For many of them, I’d argue, Netflix is a “give up only as a last resort” subscription. For them, I’d even argue that Netflix could raise prices at a level some people might think is too high — while these subscribers look for something else to cut, instead, in order to hang on to Netflix.
For everyone else, well, that’s the question isn’t it. What about when new entertainment giants like Disney finally arrive with their Netflix rivals and 20 percent of Netflix content disappears as license deals come up for renewal? NBC’s chief executive is already making noise about wanting to take The Office back from Netflix. Disney+ is going to be home to Star Wars, Marvel content and so much other great intellectual property.
But then again, that’s what makes inertia such a great business model. Prediction: You’ve got a ton of subscriptions you’ve signed yourself up for. They hit your checking account or credit card each month like clockwork. You may not even pay attention anymore, or realize all what you’ve signed yourself up for. It will either take a change in your personal financial situation, or you will have to actually grow to dislike Netflix for many of you to take the initiative and actually proceed with canceling your account, no matter how high Netflix’s prices get.