Netflix raises prices again: good news or bad news?

Streaming TV provider Netflix Inc. (NFLX) is raising prices for services. The company positions its service as premium, and it has to work in new conditions without using price wars. Netflix’s basic plan will grow by $1 to $9.99 per month, and the premium plan will add $2 to $19.99. 

The previous price increase was at the end of 2020. Netflix services are more expensive than the leading competitors. Currently, the company operates in new conditions — it is not the only provider of Internet TV services, although it is the leader in audience size (225 million subscribers). 

Netflix is not trying to compete with the price and has no plans to do so in the future. A positive factor since price wars damage the business of all participants and slow down the development of a particular direction. Attempts to attract someone else’s audience do not make sense yet. Many Internet TV users have a subscription to several services simultaneously. Netflix is fighting for its service to be the first “must-have” in a set of subscriptions or the first in line if the consumer chooses one thing. To do this, Netflix focuses on content, and the current increase in subscription prices will allow the company to receive an additional $2.4 billion per year. 

Netflix is ahead of its competitors ($12 billion over the past year). Constant replenishment of the films and TV series library allows you to maintain the novelty. Only people who watch it most of the day can view Netflix content faster than the company adds. So far, this strategy has worked successfully, and Netflix has increased revenue from $3.2 billion in 2011 to $25 billion in 2020. Operating profit increased from $376 million to $4.6 billion. Netflix does not intend to stop, and its content may be replenished with content for metaverses in the future.