Netflix Hits Users With Another Round Of Price Hikes

from the meet-the-new-boss... dept

It’s been obvious for a while that the future of internet television is starting to look increasingly like traditional cable. Initially, the streaming sector was all about innovation, choice, and lower costs to drive subscriber interest. But as the market has matured and become dominated by bigger players, some familiar patterns have emerged, including giant companies trying to lock down as much content as possible in exclusives, and a steady parade of price hikes that slowly, surely, start to erode the value proposition.

Last week Netflix announced that the company would be imposing yet another price hike. Here in the U.S., the company’s 720p “basic” tier is increasing $1 to $10 per month, its 1080p “standard” tier is increasing $1.50 to $15.50 per month, and its 4K “premium” will see a $2 increase to $20 per month. Similar hikes are also on their way to Canadian subscribers. In a statement, Netflix justified the hikes using familiar rhetoric about “improving the customer experience”:

“We understand people have more entertainment choices than ever, and we?re committed to delivering an even better experience for our members,” the statement said. “We?re updating our prices so that we can continue to offer a wide variety of quality entertainment options. As always, we offer a range of plans so members can pick a price that works for their budget.”

Granted every time the company imposes a rate hike, folks act as if the world is falling. Back when the company bungled its “Qwikster” DVD unit spin off and imposed price hikes there were no shortage of critics insisting the company was doomed. But for now, consumers continue to find the value proposition streaming offers to be worthwhile, especially in comparison to the still high prices of traditional cable TV options. Streaming still generally sees the kind of customer satisfaction ratings traditional cable companies can only dream of.

But the price hikes that have hit streaming TV services (especially live streaming services) haven’t been without repercussion. Not only did more customers cut the traditional TV cord last year, streaming TV services saw a significant reduction in growth. Netflix itself saw a significant drop in subscriber growth across 2021 and a loss in total subscribers in the U.S. and Canada, in no small part due to a 2020 price hike.

With the pricing for live streaming TV services like YouTube TV increasingly looking more and more like traditional cable, and the hunt to lock down exclusives driving increased confusion among consumers trying to find their favorite content, there continues to be a real risk the entire sector simply forgets to learn anything from the plight of traditional TV. As in, keep pushing price hikes for the same or an eroded value proposition, and you can expect a lot of potential subscribers to move to alternatives… whether that’s over the air broadcasts using an antenna, or TikTok.

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Companies: netflix

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Comments on “Netflix Hits Users With Another Round Of Price Hikes”

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35 Comments
That Anonymous Coward (profile) says:

I lack the will to look, but I have a feeling if one looked one would find former tv/cable/studio execs joining the streaming companies.

It would explain the wilful blindness to morphing into the cable providers they managed to disrupt. You bring in the "experienced" team who knows all about this & they only know how to be 1 thing so they turn everything into a copy of it.

They only reason they were winning because they refused to be like the old guard providers, and now they are putting on their house coats and yelling at those damn kids to get off their lawn.

One wonders that the next disruption will be, but given how humans behave they eventually will turn into grandpa too.

Anonymous Coward says:

Re: Re: Re:

On the advice of a friend some time ago I signed up for the one month free (snort, we must have your credit details, etc) trial. In Australia at that time the Netflix catalogue was 10% of the size of the US listings, so after working my way through roughly 1,200 items I found exactly 1 program that I felt was worth watching.

Short story: Clicked on the program only to be told that I had turn off all my Firefox add-ons (adblockers, scriptblocker and so forth) to continue. Good-bye Netflix.

Anonymous Coward says:

Re: Re:

I’m old enough to remember it cost you 50 euro to watch one season of one TV show.

Uh… if you don’t remember pre-Euro currencies, you’re hardly old at all. (The switch happened 20 years ago, which I guess is around the time it became popular to release TV shows on physical media. Most shows were not available for purchase in the ’90s.)

Also people who are nostalgic for video rental stores are idiots. They had you pay per DVD lmao.

How else were you going to get a DVD-rip if you didn’t have fast internet, and didn’t know anyone with a copy? Rental was the cheapest practical way.

Anonymous Coward says:

I no longer watch enough tv to make it worth paying for anything. I use an antenna for the local news and the rest I really don’t care much about.

I long ago gave up on cable tv and paying their prices as everything seemed to go to reality shows. I got to looking at it and there was only a couple of shows a month I was really interested in. So it wasn’t worth paying the prices they had then.

Mark Gisleson (profile) says:

Early cable user

I cannot think of any cable packages they offered in the early ’80s that weren’t higher than Netflix’s rates and that’s not adjusted for inflation.

Dive into cable and streaming and find me a package that lets me see every MN Timberwolves NBA game for less than $8/game. [Please respond w/something besides a Reddit link to pirated games]

Netflix is one of the better bargains out there, even with the rate hike. Honestly have no clue what people are comparing them to because only broadcast television is cheaper to watch.

Powell says:

Re: Adjust for $$ Inflation !

… Dollar Inflation has been raging for decades and getting worse now.
You can’t just ignore that..

US Dollar has LOST two-thirds of its actual purchasing-power since early 1980’s.
(in year 2022, it takes $2.80 to buy what $1.00 bought in 1983, by official US Government inflation rates)

US overall wholesale prices increased 10% in year 2021 alone, due to inflation.
So a NETFLIX 10% price hike last week hardly seems outrageos.

What would be the "Proper" way for NETFLIX to determine its prices ??

nerdrage (profile) says:

what's really going on

Netflix has saturated N. America and there’s no more growth to be had there. They’re trying to grow in Asia, where ARPU is far lower so they don’t dare charge as much. They are raising prices in N. America to fund growth overseas.

Their problem is, they are simultaneously getting hit with more competition in N. America so they may have miscalculated here, triggering more cancellations than the price increase is worth. And their share price just fell off a cliff, so investors may not be in agreement with this strategy.

Bottom line, streaming is entering a tougher phase now. The big growth will happen in places where ever $10/month is a princely sum. They can still grow, but it will be with cheaper content. I foresee a lot of reality TV and telenovela style shows being made for this or that country.

The whole field will crunch down to just the strongest competitors: Netflix, Disney+, Amazon and the new Discovery/HBO Max combo. Plus AppleTV+ since they are insulated from market realities and can do whatever they please.

McGyver (profile) says:

What I meant to say before I accidentally posted that was, back when everyone was going on about how much better streaming is than cable, I was like “well, give it time… they’ll get just as bad a cable”…
Little by little they are heading down the same road… Netflix has a few good shows, but most of their catalog is old or obscure crap not worth a price increase.
Cable still sucks, but streaming services are going down that same road finding new ways to nickel and dime you for everything.
Sooner than later they reach cable greed level money-grab status.

Anonymous Coward says:

I’ve never subscribed to Netflix. The only streaming services I’ve subscribed to are Prime Video (because I get that through Amazon Prime) and Peacock (because I’m a Comcast subscriber. Might as well have a cable subscription since there are a lot of streaming services and each one costs more than $10.

Thing is, every service might have like one or two shows that you might really enjoy. Subscribe for one month, watch the complete season and cancel it. There is nothing out there that requires repeat viewing.

Anonymous Coward says:

The "growth" is still there, it’s just not where these idiots are looking.

Of those I spoke to who do subscribe, they don’t subscribe to everything at once. This month, it’s Netflix. Canceled, then onto Disney+ for a bit. Canceled, then to HBO Go.

Is this not surprising when these silos introduce all you can eat buffets and consumers are going to do that on every silo they can.

There’s only one way to curb this crap, and you can bet, just like cable, rate hikes and contracts are coming.

It’s a literal race between content silos and Microsoft who’ll fire the first required contract salvo before everyone else does it.

PaulT (profile) says:

Re: Re:

"There’s only one way to curb this crap, and you can bet, just like cable, rate hikes and contracts are coming."

Contract terms would be a very bad idea and would likely kill off audiences of the service that applies them first, so I doubt they’re coming. In the meantime, you’ve already described the flexibility that’s the main benefit of these services compared to traditional cable.

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