Facing revenue shortfalls, the popular streaming service Netflix announced Jan. 15 it will raise its monthly subscription price between $1-$2. The price hike will serve to keep the company providing unique content to users.
With how much Netflix has spent to keep, obtain and create the content users want, the price hike may be necessary to combat some of the company’s deficit struggles in recent years, according to business analysts. Although the raise may seem small, it will increase revenue notably for the company.
“Netflix said last quarter that it was expecting negative free cash flow of $3 billion in 2018, and has similar expectations this year,” Jill Disis and Frank Pallotta of CNN Business said. “Free cash flow measures how much cash is generated after the company covers investments in its business.”
Analysts said the increased revenue will help Netflix create enough original content to compete with new streaming services launching in the coming months.
“Netflix has been spending billions on new content — at least $8 billion last year, based on the company’s own expectations from 2017,” Disis and Pallotta said. “NBCUniversal announced on Monday that it will launch a streaming service for its own slate of content in 2020. The new service from WarnerMedia, CNN’s parent company, will offer different tiers to its subscribers. That includes an entry-level option that will focus on films and a premium version that will have original programming along with blockbuster films. Then, there’s arguably the biggest unknown of them all: Apple. The company is likely to launch its own service sometime in the first half of the year.”
Because their parents pay for their streaming services from home, many Oklahoma Christian University students said they are unconcerned about the hike. Some students are on family accounts, which Netflix allows for an increased price, and therefore do not have to take care of the bill.
“The price hike makes sense with so many people sharing their accounts,” junior Madison Rutherford said. “My parents pay for a family account for all of us, so I suppose the hike won’t affect me much, but I understand why.”
Others who pay for their own Netflix service said they are not very concerned with the hike either, expressing it does not seem like much of an increase to them. According to these students, their loyalty and satisfaction with Netflix make them willing to pay for the continued growth of content and availability of the service they enjoy.
“Personally, I don’t mind the price increase, only because it is a few dollars,” freshman Hannah Dodson said. “I think Netflix is worth that, and I am absolutely willing to pay that every month. I use Netflix so often that it would be crazy to not keep it because of one or two dollars.”
Other students feel with all Netflix is doing, it is a better deal than potentially moving to another streaming service. According to these students, they feel with all of the added benefits of using Netflix, the price increase is worth the content and all the new areas Netflix is expanding into with its recent growth.
“The price hike is fine by me,” sophomore Gavin Meisels said. “Netflix has so much stuff going on, and they are really on the cutting edge of technology and movies. Lots of creators are moving to Netflix because it is so cool, so I think the raise is reasonable. They also don’t make you register a device, so many people can share on one account. I feel like we are getting the better deal really.”
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