From shows like Stranger Things to movies like Bird Box, Netflix has been churning out one hit after another. While all the original content is drawing in a lot of new subscribers, they obviously cost a lot of money to produce.
Netflix, as we all know, is the world’s largest premium video service, with nearly 150 million subscribers. Its membership has almost tripled since 2014, despite the fact that the price of its standard plan has gone up by nearly 63 percent.
Netflix provides a lot of original content
Netflix is yet again raising its monthly subscription prices, from 13 to 18 percent, the largest rate hike in its history. That is, the company’s standard plan, which costs $11 per month, will now cost $13 per month. The premium option, which allows two screens, as well as Ultra HD content, will now cost $16 per month, up from $14. Netflix’s basic plan is jumping from $8 per month to $9 per month.
The move is an attempt by Netflix to increase its revenue. Netflix has sought to keep the subscriber wheel turning by offering a wide variety of new content, investing heavily in original content and access rights to the popular content-the company just paid $100 million to keep reruns of the 90s sitcom Friends on the service.
But all that comes at a significant cost. In response, Netflix has raised billions of dollars in debt in recent months to acquire new content.
Disney+
The extra revenue will go toward nurturing Netflix’s slew of original programming and helping it to stay ahead of forthcoming streaming services like Disney+. These companies have plans to price their services below Netflix’s new pricing, but Netflix believes it has earned the right to increase its price by providing quality content for its subscribers, and this bold move shows it’s not afraid of any competition.
“We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience for the benefit of our members”
A NETFLIX SPOKESMAN SAID IN A STATEMENT.
The existing subscribers will be notified of the increase by email, as well as through the app, atleast 30 days before the price hike comes into effect, while the new subscribers will see an immediate effect.
This price hike could prove to be an important cash intake for the company. A price increase of just a couple of dollars is enough for Netflix to generate billions of additional revenue each year, considering that it has approximately 150 million subscribers.
Ultimately, it all comes down to the value that a subscriber feels is right. With such a large library of content, even with a price hike as big as this it isn’t hard to discern the sheer value proposition.
