Will Netflix raise prices? The survey shows that its pricing power has increased – variety3 min read
Netflix’s price offer for American customers has risen during the coronavirus epidemic – and the question for the No. 1 subscription streamer isn’t when it raises the next price.
Even amid intense competition from Disney Plus, HBO Max, Apple TV Plus and others, Netflix has seen its pricing power rise over the past five months, according to a study published this week by Coven & Co. analysts led by John Blacklage.
The Wall Street Firm’s monthly survey of nearly 2,500 U.S. subscribers showed that overall Netflix subscribers reported that they would be willing to pay more than they currently do, up from 4% in December 2012 to 55% in May 2020. And among respondents who streamed more hours per week to Netflix content, the willingness to pay more increased over the same period from 52% to 0%.
“We are not surprised after this year we have kept the COVID-19 [Netflix] As Coin analysts write, it will gain value power as it becomes a more necessary entertainment service and the data from our survey support this thesis.
Analysts do not expect Netflix to raise prices in 2020, but say the company is in a good position beyond ‘21’. The company’s content costs are expected to hit 15 15.4 billion (on a cash basis) by 2020, with investments in high-quality TV and movie content in the genres “probably confirming” [Netflix] In our view the top spot in the living room over time, ”Coven said.
Note that the survey data reflects a snapshot over time, and a sprinter could make the U.S. economy and relatively high unemployment customers increasingly price sensitive. Moreover, what people imagine they will do (i.e. willing to pay more for Netflix) does not always match the actual behavior.
Netflix’s latest popular plans – standard tires, including two HD streams – increased prices starting in the first quarter of 2019, increased 18% in the United States from 99.99 to 99.99 per month, the price increased through Q2, and Netflix’s cancellation rate increased in the second half of the year. Its revenue growth has also accelerated: full-year 2019 revenue has surpassed 20% free customer growth, reaching 28% to .2 20.2 billion.
Source: Coven & Co. Consumer Tracking Survey, December 2019-May 2020
During an interview with the firm’s Q12020 earnings for investors, Chief Product Officer Greg Peters said consumer trends in January-February this year “returned to a fairly slow level of pre-price-change.” Netflix has fined a whopping 15.8 million new subscribers during this period thanks to Coronavirus, hitting about 183 million worldwide.
“Right now, we’re not thinking about raising prices,” Peters said in April. During the Cavid-19 crisis, “We just want to be super-centralized … We’re sure we’ll be there, get a great service and make sure we’re able to provide entertainment and escape for the members around us.”
Q2 results are due to be reported on July 16 after the Netflix market closes. The company forecasts 7.5 million net additions worldwide in the second quarter, compared to 6.8 million in the year-ago period.
As a result of the global COVID-19 ban, Netflix says it expects to see a slowdown in subscribing and subscriber growth in the second half of 2020. However, as the number of coronavirus cases in the U.S. has increased in recent weeks with level recordings, increased home quarantines could benefit Netflix to move to Q3.