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Eliz Cisneroz
Somewhat similarly, when Starbucks raised its prices during the beginning of 2010, it lowered the price of a tall regular to $1.70. But, if you wanted a splash of foam, a shot of espresso, or a touch of flavor, the addition could be expensive. For a triple grande soy vanilla latte, you would have paid a whopping $6.25. Their goal, I suspect was to attract coffee lovers who would spend a little and those who would spend a lot. For a basic cup of coffee, the price would be low. However, those who were willing and able to pay more would also be satisfied. In that way, Starbucks could retain a dual clientele.
Netflix and Starbucks are engaging in what economists call price discrimination. Defined as selling the same (or almost the same) good or service at different prices, price discrimination differentiates among customers. The perfect example is movie tickets. Movie theaters discriminate by charging senior citizens less.
In economics textbooks, price discrimination is typically discussed in chapters on monopoly. A monopoly and a smaller firm with a unique good or service have pricing power that enables them to target different customers with their prices and coupons. The other economic idea we can cite here is elasticity. The following econlib graphs show the difference between the people opting for $6.99 (the Normies) and those that stick with the pricer possibilities (The Nerdies):
My soiurces and more: My Saturday favorite, the Slate Money podcast alerted me to the Netflix decision. From there, for detail, CNBC and NY Times articles were ideal. Then, do take a look at the past econlife that had my Starbucks facts and this Econlib on price discrimination.
You guys had a good thing, but now are getting greedy. 12.99 per month for something I can find free and better services elsewhere? You are now the blockbuster video of notes on the web. Good Luck, I will be going elsewhere soon.
A flood of 50-note-limit emails must have gone out over the weekend, so now we're seeing all these new threads rehashing the same topics and issuing the same feckless outcries as the dozen or so existing ones. At some point it begins to seem uncharitable to have battles of wits with the unarmed.
I was paying 1.99 per month and there was a glitch in my billing. I lost the grandfather clause to the lower price and now they want me to pay 650% more per month? No. And it's totally fair to compare the two companies. The economies of scale dictate the worth. 12.99 per month for this service is not feasible. The max price point should be 4.99.
I am a Professional subscriber and I heavily dependent for my work to EN, but I would not compare EN with Porsche. More like it is at the moment a Hyundai with only the Porsche sigh. Hopefully it will add more Porsche parts in the near future to justify the whole cost increase
I get way more use and value out of Evernote than Netflix or any streaming service. Evernote helps take the pressure off my brain so I can do other things. It does it in a way that just works without friction or stress.
If they make it faster, more stable and sorting tags and notion Synced sections, then I'm just on the level of supportive if they double the charge. But it's subjective. I understand. I think most people experience a different level of value than I. I realize that. Let meet in the middle. Same price, but with the features I talked about. ? Thx for a more average generalized approach @gazumped
Having once run a Support team at an ISP which ran into the year 2000 bug I can testify that no matter how good a company you are, no matter how good the staff, bad things can happen out of the blue that take ages to dig out from under.
The only thing you can ask for at that time is a supportive group of users who will stand behind you with patience and confidence that you will get out of the mire as quickly as possible and put things back to rights, and not just snipe at every real or imagined slip.
I find this price increase pretty shocking. I'm currently paying 69.99 a year and with the new pricing I'd be at 129.99. I upload very few images or audio files for example. So my data storage use is very minimal. Pretty much just do links and text. So this use case, especially in 2024, shouldn't be too hard to find elsewhere.
I know you jest, but there actually kind of was a free plan... an unpublished(*) one that consisted of borrowing your friends account info, thus using it for free and getting the full premium service. With regards to that "the company has previously said that more than 100 million subscribers worldwide access Netflix through password sharing and revealed in April 2022 that it lost subscribers for the first time in over a decade" -password-sharing-household-rules. (100 million - wow!)
So Netflix clamped that down starting in May 2023 and many people predicted that this would be a death-knell for Netflix. (Sounds familiar.) Instead, stock prices gained 17% in just one month after the crackdown ( -password-sharing-crackdown-nets-results-7510343) and Netflix had even gained 6 million subscribers within a few months after ( -subscribers-surge-after-password-sharing-crackdown).
* Edit: not that this was sanctioned or condoned by Netflix in any way (maybe a blind-eye at best?). "Users" doing this were definitely abusing the system whereas Evernote free users were taking advantage of a sanctioned/documented free plan.
The company added nearly 8.8 million worldwide subscribers during the July-September period, more than tripling the number gained during the same time last year when Netflix was scrambling to recover from a downturn in customers during the first half last year. The increase left Netflix with about 247 million worldwide subscribers, well above the 243.8 million projected by analysts surveyed by FactSet Research.
The company's stock price soared more than 12% in extended trading after the latest quarterly numbers came out. Netflix shares have increased by about 30% so far this year amid mounting evidence its video streaming service is faring better than most in a crowded fielded of competitors that is testing the financial limits of many households.
Netflix has picked up more than 16 million subscribers through the first nine months of the year, already eclipsing the 8.9 million subscribers that it added all of last year. But it's still a fraction of the more than 36 million additional subscribers that Netflix attracted in 2020 when the pandemic turned into a gold mine for the service at a time when people were looking for ways to stay entertained while tethered to home.
This year's subscriber inroads have been made despite entertainment labor strife centered in part on writers' and actors' complaints about unfairly low payments doled out by video streaming services such as Netflix. The company has been able to withstand the recently settled writers' strike and ongoing actors strike by drawing upon a backlog of already finished TV series and movies in the U.S., as well as productions made in international markets unaffected by the labor disputes.
"We are incredibly pleased with how it has been going," Netflix co-CEO Greg Peters said when asked about the password-sharing crackdown during a Wednesday video conference call. He predicted more subscriber gains will accrue from the crackdown for at least several more quarters as Netflix confronts more "borrower households" about watching the service's programming without paying for it.
The apparent success of the password-sharing crackdown could now free management to focus on other ways to bring in more revenue, such as a low-priced option that includes advertising introduced a year ago.
Netflix's decision to open its service up to commercials hasn't been a big boon yet. But Harding Loevner analyst Uday Cheruvu said he believes that will change as advertisers realize that the personal information the company has gleaned from viewers' entertainment tastes can help target their commercials at consumers most likely to buy their products in the same way internet powerhouses such as Google and Facebook have been doing for years. Peters said during the video conference call that Netflix is already working with is ad partner, Microsoft, to target its commercials more precisely.
"I think the advertising potential of Netflix is underappreciated," Cheruvu said. "The audience engagement with the video advertising there could be multiple times stronger than a social media platform."
In a shareholder letter, Netflix said roughly 30% of its incoming subscribers are opting for the $7 plan with commercials, growth that is likely to attract more spending from advertisers. The higher prices for Netflix's premium plans also seems likely to divert more subscribers into the ad-supported option.
"The 'streamflation' era is upon us, and consumers should expect to be hit with price hikes, password sharing limits, and enticed with ad supported options," said Scott Purdy, U.S. media leader for KPMG.
When streaming first took off a decade ago, it was led by people like me, Millennial cord-cutters who saw the high monthly price of cable TV and opted to save what little money we had (this was the unending aftermath of the 2008 Financial Crisis, after all) and just watch the best Netflix shows.
Now, streaming services have done away with that, which is fair enough, but they're also raising their prices and running ads on their basic plans. Which, again, is fair enough. With the end of the strike by the Writer's Guild of America, streaming services are going to have to pay the writers of the shows on their platforms more for their work, so that cost is going to get passed onto the customer (full disclosure: I am a member of the Writer's Guild of America, East, though digital media members were not on strike and are not covered by the contract negotiated by the studios and the guild).
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