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Ozie Melzer
Netflix, one of the only profitable TV streaming services (along with Hulu), is reportedly planning on increasing the monthly price of its ad-free subscription, The Wall Street Journal reported today. However, the price bump reportedly won't come for "a few months," as Netflix is waiting for the actors' and writers' strike to formally end, the publication said.
WSJ said "people familiar with the matter" informed it that Netflix will probably launch its price hike in the US and Canada. WSJ couldn't confirm how much prices will increase or when the increases will start. A representative for Netflix could not immediately be reached by Ars Technica for comment. Netflix declined to comment to the Journal.
Today, Discovery+ announced that it's increasing prices for its ad-free tier from $6.99 to $8.99 per month, effective immediately. A similar move from Netflix would follow the broader streaming industry's trend of jacking up prices.
As subscriber numbers stagnate, though, Netflix has been looking for other ways to increase revenue. A price hike is one obvious way to attempt to do that. Netflix also introduced an ad plan ($6.99 per month) this year and got rid of its mid-tier, ad-free Basic plan (making the lowest price for ad-free Netflix $15.49 per month instead of $9.99 per month). The company also cracked down on password sharing, charging $7.99 per month for each user outside the main household.
As noted by WSJ today, Netflix, as well as streaming rivals Disney and Warner Bros. Discovery, have pointed to its ad-supported tiers generating higher average revenue per user than ad-free tiers. Bumping up the prices of its ad-free plan could be beneficial for Netflix by generating more revenue from ad-free users and by pushing people to its ad tier. In May, Netflix president of worldwide advertising Jeremi Gorman said Netflix's ad tier has "nearly" 5 million monthly active users, per The Hollywood Reporter.
Netflix's reported upcoming price rise could also help the company manage incoming costs associated with its agreements with writers and actors. As noted by The Verge, streaming services like Netflix will be required to share performance metrics with writers and increase writer residuals. The WGA believes its new contract equates to 0.2 percent ($68 million) of Netflix's annual revenue ($31.6 billion).
Who comes up with this stuff? What ARE they thinking? Yes, I'll keep calling it Netflix. Just too bad that now we have to go to two separate websites. ? Are they just trying to open the door up for competition? I want the OLD netflix back!
Mark my words, Qwikster will not exist in three years and nether will DVDs be shipped via Uncle Sam. We will get streaming videos or nothing. Netflix has a plan and a stupid name that no one can spell will be easy to fade out soon.
I can't remember the last time I purchased a physical DVD so I assume that many other people are doing the same thing. There's a Redbox in almost every nook and cranny in this country, so new releases are just $1.00 a pop. And generally speaking, you avoid the "very long wait".
If Netflix intentionally tanks their physical DVD service, the revenue stream from licensing physical DVD's would dry up and would put greater pressure on content providers to "play ball" and sign streaming deals that are much more lucrative for Netflix than they have been in the past.
I'm still a Netflix customer, we downgraded to the streaming only plan. If they raise the streaming plan cost, I'll cancel. We used Redbox even before Netflix changed their prices. Netflix streaming content is older, but there is always something to watch. We have the most basic cable plan and basic internet speeds. We use the MagicJack as our home phone and wife & I have cell phones too.
you realize the reason they're jacking up prices for the streaming content is because the content owners are upping their license fees from 180 million to an estimated 2.3 billion (yeah more than 10x). You can't give away free stuff when it's no longer at "give it away" prices.
Let's do the math. At 180 million the cost of streaming to Netflix was minimal when split across 20-24 million subscribers. Let's say an average of 22 million subscribers for 1 year or 264 million subscriber months (22million x 12 months = 264 million monthly payments which at 7.99 is 2.1 billion). That's very close to what Netflix actually brought in last year. Anyway, that comes out to 8.5 cents per month for streaming (180million/2.1billion).
Now, If license fees jump to 2.3 billion the cost to netflix will go up over 10 fold. Actually using the 2.1 billion figure from before that comes out to $1.09. Seeing as how they have to pay to mail you DVDs at about 88 cents just to ship a DVD that 1 dollar increase in price can't be given away for free. Personally I think they should have just upped the price of streaming to a 1-2 dollar a month fee like they do for people who opt for BluRays. At the same time, the DVD business costs them more than it makes them because of the low margins so making it a 7.99 service gives them the ability to produce content, and also get more content (2.3 billion is just the cost for what they currently have it could be 2x as much for them to get more movies and shows).
In a nutshell they couldn't keep streaming free. It's like being forced to continue letting customers get free refills if the cost of coke went up 12 fold. Sure coke is cheap, but a cup of the stuff at a restaurant will set you back 2.99 and that's certainly far more than Netflix is charging for their service when you consider what you get.
We switched to blockebuster right after our free trial exp. Me and my husband live on a fixed income and recive SSI on a master card monthly. I went to log into netflix to watch a movie and it poped up my account was froze for none payment. I called them and I was told that MY MASTER card was consedired a pre paid card. I called Blockbuster and check with them and they said they could take it as a payment. When I call netflix back and told them to cancel my account I was switching to blockbuster and why they said OK. We have really enjoyed being with blockbuster, You can get blue ray DVDs movies and games for the same price.
I understand the desire to split the two business up but they should have went with something like Netflix Red and Netflix Blue, so there's still a connection between the two. It all makes sense but it's kinda lame.
This will help Blockbuster. The Netflix decision made me curious about Blockbuster and I found they had a better selection of DVD movies, shows and documentaries for my tastes. I don't think mail-order DVD is going away any time soon. There are still too many people that don't want to pay for fast internet connections and cannot stream reliably. This might have been a good move for the Netflix stock price but premature for the long-term value of the company. Blockbuster may now have a chance to survive.
This is so obvious to me but I can't understand why everyone is being so naggy about all this fee increase gibberish. Netflix's reason for jacking up prices for the streaming content is because the content owners are upping their license fees from 180 million to an estimated 2.3 billion (yeah more than 10x). You can't give away free stuff when it's no longer at "give it away" prices.
Changing the name like this, though, seems like a preamble to a sell-off. They didn't just want the name changed, they wanted the name disassociated with Netflix. Curiously, "Netflix" is the right name for the streaming service. But "Discflix" or "Postflix" or something similar could have kept the corporate branding, yet still distinguished it as something better (not in love with either of those myself, but in the 10 seconds consideration I gave it, I'd take either one over "Quickster", which doesn't even suggest a specific market, much less the video rental market).
The name change came within an apology letter. Strange, apologize and then make things worse. I wasn't big on streaming, used it during summer mostly when TV slowed down, and school out. So while I went DVD only, it was an option to add streaming next summer. Now with two sites, it's not likely I'll bother.
There still are places without enough bandwidth available to make streaming practical, so disk-based will have a market for quite some time. I live in northern Lancaster County, Pennsylvania, a mere 10 miles from a city of 90,000 souls and there is NO CABLE SERVICE! Like NONE AT ALL! Where on EARTH am I going to get streamable bandwidth?!?!?
I cancelled and I'm trying out Amazon Prime right now.
The main issue is that every ISP I've heard of sticks you with a bandwidth cap.
So streaming for a higher price isn't worth it to me. Since "Netflix" dumped the dvd portion, I've no use for them.