Netflix’s Idea Of Innovation: Two Big Price Hikes In A Row

(Mis)Uses of Technology

from the thank-you-sir-may-I-have-another dept

So we’ve been talking a lot about how as the streaming video market matures, it’s increasingly behaving a lot like the old, shitty cable companies the sector once disrupted. Instead of innovation and risk taking, we’re seeing endless price hikes, lower quality catalogs, strange new catalog gaps, labor issues, ethically flimsier policy positions, annoying new surcharges, and more and more arbitrary restrictions.

Enter Netflix, which says it’s once again raising prices after implementing a password sharing crackdown (aka raising prices):

“The streaming giant said in its third-quarter earnings report that its premium ad-free plan in the United States will increase by $3 per month, to $22.99, starting Wednesday. Its one-stream basic plan will rise to $11.99 in the United States.”

Over the last year or so, Netflix has made a lot of noise about how it’s cracking down on password sharing; something the company used to encourage. We’ve noted how these new restrictions are effectively double dipping, given that Netflix already limited account simultaneous streams, and already charged users more money if they want higher simultaneous stream limits.

Netflix consistently claims that their password sharing crackdown has been a smashing success. But while press outlets parrot those claims, we’ve noted they’ve provided no hard evidence proving it. And, in fact, a new survey of 18,000 people by a Wall Street research firm found that the password sharing crackdown remains in its infancy, and most users aren’t sharing passwords anyway:

“A full 77% of respondents say they only use their own account, while 8% sometimes lean on somebody else’s subscription (the report doesn’t get into why), and 14% only watch on other people’s accounts.”

The study showed that the lion’s share of folks doing the sharing (42%) are kids on their parent’s account, who probably aren’t buying their own subscriptions anytime soon. It also found that only 23% of password sharers had received warnings about their usage, suggesting Netflix is still ramping up the effort.

The study also found that most users confronted with sharing passwords would likely just leave for another service:

“MoffettNathanson’s report also suggests that most viewers busted for account borrowing will take their eyeballs elsewhere. Only 32% of people who borrowed a subscription and got blocked said they would either get their own account or already had.”

Yes, Netflix will make more money by being annoying about password sharing, though we’ve noted how many of the estimates of how much Netflix stands to make aren’t rooted in reality either.

But with organic streaming growth saturated, Wall Street’s demand for improved quarterly returns at any cost starts to nibble away at product quality and customer satisfaction. You start to see a sort of self-cannibalization. Get too pushy, and users not only flock to other subscription streaming alternatives, but free services such as YouTube and TikTok. But short term-focused investors don’t care.

Right now, subscribers clearly still see value in the prices Netflix is charging. But with Netflix executives very keen on pushing their luck and with zero financial incentive to remain disruptive and innovative, it’s just a matter of time before that luck runs out.

Filed Under: cable tv, competition, price hikes, streaming, tv, video
Companies: netflix