I love Netflix (NFLX). I honestly do not know where I would be during busy season without the streaming subscription service and even on lazy Saturday or Sunday mornings with the lady binge watching a show with a cup of coffee. For us “cable cutters”, Netflix has been a wonderful supplement for our entertainment purposes. Back in 2014, Netflix rose their prices on new customers from $7.99 to $9.99, but didn’t touch us grandfathered customers. They didn’t touch us, until now. Our price will go up 25% from $7.99 to $9.99 or a “small” $2 more per month or $24/year (excluding taxes). Question is – when and at what price will Netflix be too much or too high?
Netflix Background
From Netflix (NFLX) company profile page, “Netflix is the world’s leading Internet television network with over 81 million members in over 190 countries enjoying more than 125 million hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments.”
How amazing is that? Over 125M hours of TV? First off, damn.. that is sad and I know I contribute to that total late at night instead of writing articles for all of us! But 81 million members all over the world. They are the United States well-recognized name when it comes to streaming services. Amazon (AMZN) Prime service is underway, but they are no where near the streaming recognition as Netflix is. I don’t know how many times I ask people about a show and they ask – “Is that on Netflix?” as if a tissue is Kleenex. It comes with the streaming territory on this one.
They started in 1997 with the DVD rental service, as that was taking off, and then they were leading in the streaming service. I could conclude that they are “ahead” or at least in the lead when it comes to the changing technology within the entertainment service department. What else were they on the forefront of? Made for “Netflix Original” series – Insert: House of Cards, Daredevil, etc.. the list goes on and these are blockbuster shows. They are continually adding more subscribers now that they are going to a world-wide reach approach. Very amazing, however, the question remains – where will the cost go?
Netflix Price & Potential Price
For as many years as I’ve been a streaming member (could be 5+ years now)i Have paid a very very low fee of $7.99 + tax. Having Netflix supplements and is support for the reason Why I Don’t have Cable and, funny enough, my recent battle and change of internet from AT&T (T) to WOW! internet service – allows streaming at a much, much faster rate (about 6x faster!). I love it – Netflix at $7.99 and my internet at $24.99; total cost = $32.98. Perfect.
Now, that price will be $9.99 going forward with Netflix, which obviously I could care less about – as $9.99 is still a great price for an amazing service, especially with the now Original shows and movies they are producing. However, how many more 25% increases will we endure in the short and long term? I started giving this more thought.
If my internet is $24.99 and my Netflix service is $9.99; I’m now paying a rounded $35.00. Okay, perfect, low price and incredible service. However, I know there are internet + cable bundles from $70-$90 out there, which is why I avoided them in the first place and I know it’s a reason why Bert is debating to cut the cord himself. At one point, my internet and Netflix was a combined $45, which I feel is still just fine. But how much is too much for me?
I believe it’s easy. No matter what – I am going to have internet. I am going to have to battle every 12 months to keep it at a very low rate, preferable under $35. I would love to avoid the ceiling of $50 on a combined effort, as for $20, potentially, I could have sports and other channels such as HGTV, Food Network, CBS included.
Therefore, at my current price of $25 for internet, that leaves a $25 ceiling on Netflix. However… if the internet jumps to $35 and I can’t win that battle, then my maximum for Netflix would be $15, but how long until then? If they jumped $2 easily, couldn’t they do it again or even a $5 increase to round it off to $15 for 2017? Do I need to start heavily monitoring Netflix? Would they change their customer access levels? Also – could there be a disruption with cable companies with their trend of going towards more subscription and streaming based services that could cause Netflix to either increase prices, competitively try to maintain contracts of some sort and leaving the customer to bite the bullet? It’s interesting, when thinking of what could happen…
Conclusion and inquiries on Netflix
I don’t foresee another price hike for customers in 2016, given us legacy customers are feeling one and would be very difficult from management’s perspective to double hit us in one year. That, however, doesn’t rule out price increases going forward in my mind. If it jumps $5 to $15/month, that’s a 50% increase. Think there is potential there? I have many questions for the readers – what is your maximum price for Netflix? Do you foresee another price jump here? If so – when? If not – why? Do you see anything else tempting in the streaming space, such as the Sling box? I would love to see the debate, thoughts and insights on this one, as I think it’s interesting and something that rarely, if ever, gets talked about. Please leave comments and questions below! Appreciate everyone for stopping by and happy streaming!
-Lanny