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Edward Kivlahan January 23, 2019

Netflix’s presence as a streaming service of licensed and original content has been growing throughout the 21 years since its founding. Since it first began providing streaming in 2008, it has grown into one of the primary content streaming services worldwide.

The original price point in 2008 was $4.99 monthly for the combined service of streaming and mailed rental DVDs. The monthly cost has changed multiple times in the 11 years since then and the most recent change has been met with some opposition. The pricing for the most popular plan, an HD two-screen subscription, was raised from $10.99 to $12.99 per month and many of the other plans followed suit.

The public response to this has been mixed, with some dismayed with the additional cost and others excited about what it might mean. The stock market saw an increase in Netflix’s stock of over 6%, but that may not mean much to the nearly 58 million consumers in the U.S. alone that subscribe to Netflix already.

The simplest inference to take from this price increase is that Netflix is gathering funds to continue expanding its pool of content and maybe even expand its film and movie studio assets to increase the rate of production for original content. Another element at play is the cost of licensing content that is popular on Netflix but produced by other studios such as Arrow, Supernatural, and many more.

Assuming each subscriber’s plan increases between one and two dollars, the increased revenue from the worldwide total of around 118 million Netflix users would be in the range of $180 million every month once the price change goes into effect for the users that have been using Netflix since before the price change. By comparison, the recently released Bird Box had a production budget of just under $20 million.

Despite the initial backlash of the price change, Netflix appears to be going as strong as ever. The increased funding will surely expand its capabilities to produce and license content and make the experience worth the additional cost. Looking forward, Netflix is still at a reasonable price for the amount of content it provides. The price of the average subscription is less than going to see one movie in theater per month assuming one buys concessions as well, and the trends of Netflix’s price points don’t indicate that another price change is going to happen any time soon.

Sources

https://www.pastemagazine.com/articles/2016/04/netflix-is-increasing-its-monthly-subscription-her.html

https://www.npr.org/2019/01/15/685741087/netflix-increases-subscription-prices-as-it-churns-out-original-content

https://www.youtube.com/watch?v=rZhxI1tvYNI

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