On Jan 16, WSJ writer, Joe Flint, reported that Netflix raised prices for its subscriptions, something the organization had not done since 2017. Specifically, the most popular subscription increased “by 18% to $13, from $11.”
Upon announcing this hike, Netflix’s stock price also went up: 6.5%.
Evidence suggests that the increase is aimed at paying for Netflix’s increased spending on content. But it also signals that Netflix believes consumers have flexibility in discretionary spending. A spokesperson from Netflix said, “We change pricing from time to time as we continue investing in great entertainment and improving overall Netflix experience for the benefit of our members.”
Netflix’s change is a clear signal that the competition for quality online streaming is heating up.
Mr. Flint reports, “Industry analysts expect Netflix this year will spend $12 billion licensing and creating content, more than double what it spent just two years ago.”
The streaming market has no signs of cooling off. Later this year, “Walt Disney Co. and AT&T Inc.’s WarnerMedia are launching their own streaming services to compete with Netflix.” Despite these increases, Mr. Flint notes, “Netflix’s offerings are cheaper than typical cable-TV packages.”