As the world’s largest streaming platform, Netflix enjoys high visibility from production houses, competitors and journalists. Crossing the 167 million subscriber mark, Netflix is giving a hard time to other VoDs like Hulu, CBS All Access, Prime Video, HBO Max and Disney Plus.
In 2019, the streaming giant grossed over $ 20.15 billion in revenue, which is a 127% increase from 2016. However, despite all these accolades, Netflix appears to be operating at a loss. All money earned is usually spent on research and development and adding new content.
As such, it’s safe to say that Netflix will need to make a profit this year, if they are to keep things going. And as part of this, they have planned to introduce price increases for its US subscribers on the standard and premium levels, as they did last year as well.
How much is Netflix now?
Currently, if you go for the standard plan, it will cost you $ 14 / month. On the other hand, if you go for the premium plan, you will have to pay $ 18 / month. This shows a price increase of $ 1 (from $ 13 / month) on the standard plan and a $ 2 increase (from $ 16 / month) on the premium plan.
Therefore, if you live in the United States and pay for a Netflix subscription, you will need to donate a little extra to keep your account working. Industry insiders were predicting a price change, and their prediction turned out to be correct, as Netflix even raised the cost of some plans in Canada.
Keep in mind, however, that Netflix rolls out price changes country by country. This means that if the price increases in a country, it will not indicate an overall price change. So how will this price change help Netflix? Well, that seems like a tactical move as we see more options when it comes to entertainment.
Of course, if you want to keep paying less, you can use a Netflix account from a profitable region like India, Brazil, and South Africa. Since you are based in the United States, access to a foreign account will always give you access to the Comprehensive US Netflix Library.
The streaming war 2020 and Netflix
This year we’ve seen the addition of new streaming services like Disney Plus and Apple TV, which are already doing pretty well. Add that to the cutthroat competition from CBS All Access, Hulu, and Prime Video, it’s safe to say that Netflix is feeling a bit under pressure, especially for its audiences in the United States.
Until a few years ago, the biggest competition in the online streaming space for Netflix was Hulu, but now, in the United States alone, VoD must also grapple with the shared attention of consumers. people who play video games or watch YouTube. Now only the United States has Fortnite, Twitch, YouTube, TikTok, Peacock, and HBO Max.
With this divided attention, it’s getting harder and harder for Netflix to keep its viewers engaged. While they do a great job introducing some amazing Netflix Originals, a price hike will definitely help them make the changes needed to continue to dominate the streaming industry.
A spokesperson for Netflix said the prices were changed “so that we can continue to offer a greater variety of TV shows and movies. As always, we offer a range of packages so people can choose the price that best suits their budget, ”the spokesperson added.
Where will the money be used?
Another reason for Netflix’s price hike is that they are investing heavily in product features and content listing. For the past seven years, VoD has increased its annual content budget every year, already spending nearly $ 18.5 billion in 2020 (which is why it still operates in debt).
Nonetheless, the price hike will help change things. Not to mention, the COVID-19 lockdown has already resulted in a huge amount of subscribers around the world watching food cravings on Netflix. As we move into Lockdown # 2, streaming trends are expected to increase dramatically.
Greg Peters, COO of Netflix, said: “The basic model that we have, and what we really think about our responsibility and our work, is to take the money our members give us each month. and to invest it as wisely and intelligently as we are. can “.
Wrap things up
While a $ 1 and $ 2 price hike on the standard and premium plans might not seem like enough, when the numbers are added up in millions, that’s a lot of profit for Netflix. The king of streaming wouldn’t make any move without due diligence and every move he makes is creating ripples in the market as well.
Therefore, if they have increased the cost to the customer, other VoDs could also follow suit. However, the end goal of Netflix has been and always will be to provide more value to their members. Hopefully this price hike will help this virtuous cycle of value creation and investment underway.