That Netflix will soon increase its prices is not news. Such increases are pretty regular and pretty predictable. Reactions are pretty predictable too – every time a hike is announced, people complain and drop or threaten to drop the service.
Or they might at least drop it temporarily and re-up when there’s something new they want to see.
And therein lies the main reason the price is bound to go up again soon. It’s not just because Netflix is facing more and more competition, with the likes of Disney+ and Apple TV+. It’s because Netflix is paying billions of dollars to keep the content fresh, and some of that cost is passed on to the viewer.
How much has Netflix raised its prices?
Although Netflix’s DVD-by-mail operation still exists, we’re only considering the history of the company as a streaming outlet, and that started in 2010, when the price was $7.99. The price for the same plan is now $12.99 per month, so the price increased about 60 percent in 10 years, according to Quartz.
Throughout that time, the streaming service has gained 140 million subscribers, becoming the dominant force in the industry. It has faced competition from the likes of Amazon, Hulu and HBO, but Netflix remains the predominant streaming outlet in the US — so much so that Netflix has become kind of shorthand for any streaming content, even if it’s not on Netflix.
Consider the protest a religious group made against Good Omens, despite the fact that it was actually an Amazon show.
When the prices go up, they usually go up about $1 a time. The price hike earlier this year was $2, which set off some alarm bells. It may or may not be a coincidence that Netflix saw a drop in subscriptions this year, according to CNBC.
More competition is on the way
The remainder of this year will be pivotal for Netflix, with Apple TV+ and especially Disney+ serving to undercut Netflix’s dominance. Both companies did this with price points significantly lower than Netflix: Disney with $7 a month and Apple at $5 a month. Mighty as both those companies are, they’re still new to the streaming game, particularly Apple, which up until now hasn’t been a content producer.
Netflix knew very well this was coming. That’s why, according to this chart, Netflix has been spending more and more money on content. In 2015, the spend was $1 billion, which is massive enough, but, the amount has increased almost every quarter, with the most recent amount being nearly $4 billion dollars.
Netflix has spent money not only to keep its current producers, like the Duffer Brothers of Stranger Things in the fold, but to lure producers that have had massive success before them, including Shonda Rhimes and David Benioff and DB Weiss of Game of Thrones. They spent upwards of $100 million to finance Martin Scorsese’s movie The Irishman, when other Hollywood studios balked at such a massive price tag. Someone has to help pay for all those deals. And that someone will be us.
Netflix isn’t going anywhere, even if viewers start to
There will no doubt be people who will defect from Netflix to Disney, Apple, and/or HBO Max, which this week announced a hefty lineup of original product from the Warner libraries.
Even so, the idea of a “Netflix killer” seems silly, because numerous products have been dubbed “iPhone killers” and those certainly have remained dominant being the most expensive products on the market.
Apple’s offerings are especially thin, and while Disney’s are not, they still won’t have every MCU film or every Pixar film even after its launch date.
But instead of killing Netflix, all the new services will more likely hurt traditional cable and satellite companies, as streaming increasingly becomes the norm. Netflix may erode, but it will always be seen as the leader, as content and prices continue to do the opposite of eroding.
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