Netflix Price Increase Could Fuel Faster Growth

Netflix Price Increase Could Fuel Faster Growth

Netflix — whose shares are up 53 percent up to now in 2020 — only announced a price increase. Is it a sign for you to purchase the stock?

The solution depends on if it cuts into Netflix’s subscriber and revenue growth. If the price increase causes prospective subscribers to join with lesser priced rivals, such as Disney+, it will be bad for the inventory.

If it doesn’t have any effect on — or accelerates — subscriber expansion, it is going to boost Netflix’s revenue and provide extra cash that Netflix will invest in new content that attracts and keeps subscribers.

Since people subscribe to internet streaming services for compelling content, instead of the cheapest cost, I think the price increase is good for Netflix investors.

Netflix Increases Costs 0%, 7.7%, and 12.5%

Netflix recently reported third-quarter results that disappointed investors.

Netflix — which anticipates adding 200 million readers for all of 2020 — fell far short of its subscriber growth forecast in the next quarter. Its net subscribers increased by 2.2 million — 12% short of its prediction. As the Journal wrote, Netflix’s North American subscriber growth dropped 94% between the third and second quarter from 2.9 million to 180,000.

On October 29 Netflix announced a price increase that fluctuates based on the sort of subscription.

While the price of its fundamental plan — that supports DVD-like quality — according to CNBC, will remain at $8.99 a month, the purchase price of its typical streaming plan — which provides 1080p quality and allows subscribers to view on two displays simultaneously — increases 7.7percent from $12.99 to $13.99.

The price of Netflix’s premium plan — which affirms 4K resolutions and HDR and as many as four displays — will rise 12.5percent from $15.99 to $17.99. New readers will pay the new rates instantly while present subscribers will see the fee increase within the next two weeks.

Netflix Investing to Stay Ahead of the Competition

Competition in the internet streaming industry is as Darwinian as it’s. The winner in this business is the one that generates a better future for customers — and does so more effectively and sooner than rivals.

During two waves of technological invention, Netflix has managed to fill this role. As I wrote about seven years ago, Netflix CEO Reed Hastings is a master of adaptation. He helped wipe out Blockbuster using Netflix’s DVD-by-Mail service.

Netflix next shoved the movie business back on its heels by pioneering an online streaming service. The trick to achievement, among others described in my forthcoming book, Goliath Strikes Back, was Netflix’s sudden ability to produce compelling original content.

Also read: Netflix Subscriber Growth Slows After Covid-19

Netflix has mastered a success cycle — invest in original content, attract audiences that addictively see the content, and increase prices to finance new content. Netflix chief operating officer Greg Peters hinted in the price growth from the October 20 conference call noting that if Netflix’s content investment yields more value for users, it may ask members to”cover just a bit more” to fund new content.

Netflix’s success has drawn rivals. T +4.3percent HBO Max and Comcast’s CMCSA +8.1% Peacock and the better established Amazon AMZN -4.9percent ‘s Prime Video, noted CNBC.

Many of these opponents are struggling slowly to reevaluate their old business models. After all, the stunt has accelerated the trend away from individuals going into movie theaters, visiting theme parks, and paying for cable bundles including countless channels that most viewers do not want.

Regardless of the competition — and consumers’ tendencies to subscribe to multiple services — Netflix remains in the lead.

On September 30, Statista noted that Netflix was the very in-demand service with most users of other providers too subscribing to Netflix and a lesser extent Amazon Prime Video. How so? In the USA, 67.1percent of Netflix subscribers also subscribed to Amazon Prime Video, and over 50 percent also subscribed to Hulu.

Netflix Changes Its Top First Content Executive

Netflix isn’t resting on its laurels and the disappointing new subscriber growth in the third quarter prompted a shift in direction.

Also read: One Key To International Sales Growth:

In September, Cindy Holland, who had directed Netflix’s unique television programming operations, departed the business.

Netflix promoted Bela Bajariain — that formerly”headed [strong growth regions for Netflix] unscripted programming and global content,” mentioned the Journal.

Over the previous six years, cost increases have done little to deter new subscribers.

The winner of these flowing wars will continue being the business that keeps coming up with original content that retains subscribers paying. Netflix’s ability to keep its competitive advantage and revive its brand new subscriber growth today falls on Bajariain’s shoulders.

Written by
Arpit Singhal

I love working with Blogging and doing it the right way. #1goal: Keeping it as simple as possible for viewers.

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