Netflix is Raising its Subscription Prices- All You Need to Know

Man watching tv.

Man watching tv.

Over the course of years and many mailed DVD’s, Netflix has managed to secure a spot not only in our hearts but in our homes as well. But lately, we’ve all been taking the competition a little bit more seriously.

Not Your #1 Anymore

As consumers, we’re looking for the biggest bang for our buck. If that means switching to Hulu or Amazon Prime because they’re cheaper, then so be it. As a multi-million dollar company, Netflix is also eyeing up the competition.

Where Netflix used to be the number one go-to source for your favorite movies and tv shows, it’s now become part of a list of companies offering your favorite entertainment.

Competition Runs Wild

Recently Hulu has teamed up with Spotify, a music app, to give it’s customers two of their favorite things for the price of one. For $12.99 a month you can get ad-free music as well as over 75,000 hit TV shows and movies. Without music, the most basic Hulu plan costs $7.99, and the no-ad version costs $11.99.

Amazon Prime costs $12.99 per month, but also comes with free two-day shipping, as well as discounts at Whole Foods, and free video games.

Now, Netflix in the United States has risen again. The basic Netflix plan will go from $8 to $9 per month, the most popular HD/multiple devices plan will go from $11 to $13, and the premium 4K plan will go from $14 to $16. That’s still cheaper, for the most part, than HBO, which costs $15 monthly.

Shows Aren’t Cheap

And why the sudden raise in prices? It’s because Netflix, which will report its quarterly earnings on Thursday, is spending over $18.6 billion on content. They recently paid approximately $100 million to AT&T for the popular TV show called “Friends.” [1]

Netflix original shows are also expensive. Their show “Stranger Things” cost about $8 million per episode.

The company had negative $2 billion free cash flow last year, and they aren’t expecting it to get better. Instead, they expect the number to continue climbing, adding to the companies debt. About 58 million people in the United States and 130 million worldwide use Netflix, making it one of the largest streaming services.

The Game is On

Not to be outdone though, companies like Walt Disney Company, AT&T and NBCUniversal are all working on their own streaming services which they plan to reveal by 2020. As more and more companies come up with their own streaming platforms, they provide more competition for Netflix. It’s not just about providing movies and TV shows anymore; it’s about catering to your customers every need, so they never want to leave.

As Netflix’s chief executive, Reed Hastings, said in October: “There’s never been so much TV and movies being created around the world. So the game is on.” [2]


Notes:

  1. ^Thier, Dave. “Netflix Is Hiking Its Monthly Subscription Prices, Here’s What That Means.” Forbes, 15 Jan. 2019, www.forbes.com/sites/davidthier/2019/01/15/netflix-is-hiking-its-monthly-subscription-prices-heres-what-that-means/#443daf5174a8. (go back↩)
  2. ^Lee, Edmund. “Netflix Is Raising Prices. Here’s Why.” N. Y. Times, 15 Jan. 2019, www.nytimes.com/2019/01/15/business/media/netflix-price-increase.html. (go back↩)

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