Netflix last week announced its biggest price increase in history, with all three of the company’s streaming tiers — from the basic plan to the premium plan — going up by $2. While not an outrageous price increase, it does speak to Netflix’s ongoing effort to boost revenue, an increasingly challenging endeavor given how much the company continues to pour into developing original content. What’s more, Netflix will eventually reach a point where subscriber growth begins to plateau.
In light of Netflix’s recent price hike, Streaming Observer conducted a survey to ascertain whether or not the higher monthly rate might prompt some subscribers to leave the platform. When the dust settled, the 3% of 607 respondents indicated that they would “definitely cancel” their subscription. Meanwhile, 24% of respondents indicated that they “might cancel” sometime in the future.
While the numbers above might sound worrisome at first glance, there’s no indication that a mass exodus from Netflix is on the horizon. Indeed, the streaming giant has raised prices before and similar surveys in the past have yielded similar responses. More than likely, subscribers get a little heated in the aftermath of a price increase but don’t ultimately cancel their subscriptions when push comes to shove. And besides, the bang for the buck Netflix provides with respect to both licensed and original context is arguably unrivaled across the media landscape.
One of the more interesting aspects of the Streaming Observer survey, though, centers on ad-supported content. Specifically, the survey found that 65% of respondents would be okay with ads on the platform if it was part of a discounted or free tier.
In the past, many Netflix users were adamant they would never tolerate ads on the streaming service. However, the latest round of price increases has most subscribers reconsidering. 29% said they would need 50% off to tolerate a version of Netflix with commercial interruptions, 13% would need 25% off their current bill, and 8% would need a 75% discount. 15% of respondents said the service would have to be totally free in order to deal with ads, while a little over 1 out of 3 subscribers said no discount would be enough.
Is it possible Netflix at some point may roll out an ad-supported option for users? It may seem like a long shot today, but given how fast the tech landscape is shifting, and given the fact that Netflix will inevitably have to find new revenue streams, it’s not an idea worth dismissing out of hand. If anything, such a strategy might prove to be quite lucrative for Netflix given that advertisers would presumably be able to pay top dollar for the ability to reach shows with desired demographics relative to whatever product is being advertised.
