Netflix has introduced price hikes for its US subscribers, by putting up the price of its standard plan to $14 monthly and its premium tier to $18 monthly.
The latest price for the standard plan is an increase of $1 from $13 per month, whereas the new premium tier cost is an increase of $2 from $16 per month. The new subscribers will now have to pay for the monthly fees that were updated.
While the current subscribers will get the latest prices in the next few weeks. As they launch with the billing cycles of the customer.
Industry insiders have for so long waited for another round of price hikes at Netflix, which last subscription fees increase in January 2019 in the US. Of recent, Netflix placed an increase in the price of some in Canada.
Netflix released the changes in price on a country-by-country basis and this change “in the US does not influence or indicate a global price change”, a spokesperson of Netflix said to The Verge.
These price hikes also came in at a point when people have got so many options for entertainment than ever. Most especially in the United States. Some years ago, the greatest competition of Netflix wad Hulu in the streaming space.
Also, the company wanted people’s interest in being split watching YouTube, sleeping, and playing video games. But now, only the US has got Disney Plus, Fortnite, HBO Max, TikTok, Twitch, Peacock, and YouTube. Netflix knows about this.
The comment of the company’s spokesperson
A Netflix spokesperson said to The Verge that prices are updates “so that we can continue to offer more variety of TV shows and films”.
“As always we offer a range of plans so that people can pick a price that works best for their budget”.
These price hikes also came in as the company is searching for a way to invest so high into its content slate. As well as its product features. The company has as well placed an increase in its annual content budget every year over the past seven years. Using approximately $18.5 billion alone in 2020.
However, things might have changed now because of the coronavirus pandemic. An increase in the competition simply means that Netflix needs to keep stepping up its game. To make sure that it has both great content and plenty of it.
Not only that but also working hard to make the actual platform better. That is a lot of money, and this comes as a result of the price hikes.
Netflix executives have made peace with dropping some customers
The executives of Netflix, just like co-CEO Reed Hastings have made peace with dropping some customers. And this is what the industry calls “churn”. Reed Hastings said to the analysts during the second-quarter earnings call of the
company. In July that a lot of people might drop Netflix at some point and move to other streamers and subscribe.
However, the main aim was to “have so many hits that you know when you come to Netflix you can just go from hit to hit to hit and never have to think about any of those other services”.
Building up that regular series of hits that draws the interest of people to sign up and stay gets costlier – fast-. And that is exactly where price hikes occur.