Netflix announces to jack up prices for US subscribers by 13 to 18 percent during the last week which is considered the largest price hike ever by the company. The growing popularity of Netflix its streaming service and quality is irrefutable but there are two sides of the picture the one focus on customers and the other one on industry and competitors.
In a recent customer survey conducted by Streaming Observer is an eye opener from customer’s perspective, according to the data collected 27% of the customers are more likely to cancel the subscription after the price hike and many of the customers are interested in cheaper subscription plan even with ads.
Netflix Spokesperson said, “The Company has raised its prices to allow it to “continue investing in great entertainment and improving the overall Netflix experience for the benefit of our members.” Fortune reported.
The survey was conducted among 607 random US-based Netflix subscribers including male and female. The survey had some interesting results that we will discuss further.
When the respondents were asked will you continue on Netflix after the price hike, more than 60% of the customers said they will continue on Netflix even if the price is raised. This indicates strong penetration of Netflix and its future endeavors of bringing more original shows to the customers. The decision is well backed by the customers. However, 27% of the respondents said they might cancel the subscription. Now we cannot take that very seriously because if Netflix brings more original series after the price hike the customers that are planning to cancel would definitely change their mind.
Netflix Must Introduce New Original Series Parallel To The Price Hike In Order To Retain Customers.
Although, more than 60% of the customers would stick around even after the price hike, but there are 27% of customers that are thinking to leave the platform, 10% of the customers are also looking for downgrade. However, introducing new TV shows or Original series parallel to the price hike would keep the customers interest intact and would help the company to retain customers.
Ad Supported Streaming
Ad supported streaming on Netflix is not a very good idea from the customer’s perspective, 35% of the customers said there shouldn’t be any ads while streaming while 15% also believe that if they have to watch ads then the service should be free, 29% of the customers said they can accept ads if Netflix offers 50% discount. So if Netflix is planning to keep the prices low with ad supported streaming that may not be a good idea.
Industry and Competitors
Netflix entertains roughly 58 million US subscribers currently, according to Fortune, Netflix is still inline after the price hike with its competitors, Hulu offers $13 per month subscription for ad-free streaming service and HBO service costs $15 per month. Secondly, Amazon Prime Video costs $120 per annum for Prime Subscription.
As long as Netflix produces interesting TV Shows and series it wouldn’t create enough gap for its competitors to fill it with their offerings.
Even after price hike Netflix plays an important role in streaming market and wouldn’t be affected much with this strategy, some customers may leave Netflix to save money but it would not be a turning point for the company to revisit its strategy.