It wasn’t too long ago that Netflix was a shoddy DVD-rental service that relied on USPS. Back then, Netflix was like Blockbuster, but with long shipping times and the unavoidable blank periods between returned and incoming DVDs. How times have changed. Now, Blockbuster is nowhere to be found, and, with 139 million paid users worldwide, Netflix has bolstered its influence in the streaming market so much that films debuted exclusively on the platform are dominating the award circuit. For students like me, Netflix’s significance is no excuse to routinely increase prices, and with its recent price hike, I have been weighing my options — and realized that Netflix is not indisposable.
In January, Netflix announced a $1 monthly price hike for its basic plan, and $2 per month for its other plans — meaning that the price for the most popular Netflix subscription plan ($10.99 a month for two HD streams) will now cost $12.99. Netflix’s spokesperson justified its action by stating that the extra cash will be used to “continue investing in great entertainment and improving the overall Netflix experience for the benefit of our members.” Immediately, the stock market rejoiced and Netflix’s market value rose nearly seven percent in one day, as it took the price hike as the equivalence of increased revenue.
But what about everyday users? The situation is somewhat confusing for the rest of us. This is the first time Netflix raised its price for the lower tier basic plan. Online backlash has been minimal. There were no signs of people calling for protests or boycotts against Netflix, but price hikes, when not done strategically enough, have dire consequences. For example, as a result of Apple’s price hikes with their latest iPhones for two consecutive years, the once invincible technological giant has suffered from substantial losses in market value and market share. They could easily have avoided the situation by not charging their cell phones a premium of $999 and beyond; likewise, Netflix’s venture into higher subscription fees will risk turning watchers away.
Students like me consider budgeting a priority, and that involves not subscribing to too many streaming services at once. Interestingly, with Netflix included, there are four popular streaming services operating in the U.S., the other three being Amazon Prime, HBO Now and Hulu — all of which possess some very strong content that I’m willing to watch. Granted, Netflix is the service that introduces most brand-new exclusive titles, but I am still not convinced to prioritize Netflix over the other services, especially if the pricing strategy continues on and the price gaps widen. Both Amazon Prime and Hulu offers discounted rates for students at about $4.08 and $4.99 per month respectively, while Netflix does not offer any discounts. Another extra dollar per month for Netflix is honestly enough to turn me away.
Furthermore, for casual audiences who are not keen on watching Netflix exclusives, it’s not necessarily the most alluring service. Amazon Prime is arguably more appealing than Netflix in terms of overall benefits, as it comes equipped with perks such as two-day shipping for purchases on Amazon.com, access to Audible audiobooks and even savings at Whole Foods Market — features widely appreciated by students. And students can access Hulu’s combined plan with Spotify at a discounted rate. As I have mentioned, dropping Netflix is not a dealbreaker for me. I am willing to enjoy many of the content I would usually turn to Netflix for elsewhere. And if price hikes become the norm, Netflix will have to debut even more exclusive content, or it might face a mass exodus of paid users sooner than later.
Apple’s losses with regard to the iPhone XS Max can teach Netflix one thing: just because people put up with (or don’t notice) little price hikes at first does not mean they will be milked forever. Netflix might have had a pass by raising monthly fees by $2, but from now on the streaming service has to tread the path carefully, or competing services, like Amazon Prime and Hulu, will be lurking in the corners waiting to see its demise.
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A version of this article appeared in the Monday, Feb. 25, 2019, print edition. Email Wayne Chen at [email protected]