[KA-CHING] Time to Drop Netflix?
About 17 million long-time Netflix subscribers will get a sticker shock in May, 2016. That’s when price hikes targeting “grandfathered” accounts will take effect, boosting your monthly fee for the video streaming service. Read on to learn why it’s increasing and how Netflix’s new prices and offerings compare to its competitors...
Netflix Raising Prices For Some
Netflix is raising the price of a 2-device HD plan to $9.99 per month from $7.99. Grandfathered subscribers avoided two price increases, the first in November, 2014, and another in October, 2015. But Netflix finished 2015 with over 75 million subscribers worldwide up from 69.2 million three months earlier. It’s just not as important to retain early subscribers as it used to be, so it’s time to bring them up to the going rates.
Netflix needs the increased revenue, too. The company is planning to spend $1 billion in the near future, in an attempt to establish itself as the leader in original programming. That’s a significant differentiator in a streaming market dominated by re-runs and delayed broadcasts.
Starting in May, Netflix will have three price and service tiers. The $7.99/month Basic plan provides non-HD streaming on only one device. The Standard plan ($9.99), into which grandfathered accounts will be moved automatically, supports HD on up to two devices simultaneously. The $11.99 Premium plan enables ultra-HD (4K) streaming on up to 4 devices simultaneously.
There is no point in getting Premium service unless a) you have 3 to 4 people who share the account, or b) your TV supports 4K and you just can’t live without it. Note that you can drop down to the Basic service if you want to keep your $7.99/month rate. If you're a one-screen household, and you can live without high-definition video, this makes sense.
Amazon Prime membership costs $99/year or about $8.25/month. It comes with Amazon Video service, which has an impressive catalog of TV shows and movies available on demand. Prime also offers lots of other perks, including free two-day shipping on Amazon purchases, Prime Music (more than a million songs), Prime Photos (unlimited cloud storage), and the Kindle Owners' Lending Library.
The Hulu Plus No Commercials Plan is $11.99, and its Limited Commercials Plan is $7.99. The free Hulu option has many current TV shows, but doesn't allow access to the last 5 episodes or past seasons like the paid service does.
The 800-Pound Gorilla
That’s it for major competitors; even Apple has not made any progress on its long-rumored streaming service. The cost of streaming infrastructure is enormous, and negotiating with content networks for streaming rights is tough.
Netflix is the 800-pound gorilla in the room, with three times the subscriber numbers as second-place Amazon Prime. Bear in mind that Amazon Prime subscribers don’t necessary watch Amazon Video. Its dominant position gives Netflix a huge advantage in negotiating with content providers, and in developing content in-house.
Netflix is doing well on original programming. It’s original series, “House of Cards,” has won two Golden Globe awards and six Emmy awards, and “Orange Is the New Black” has won four Emmy's. The company plans to keep pouring money into high-quality, original content. Even with the May price increases, that means Netflix will be going deeper into debt.
What matters most to you in a streaming service: price, original content, or display resolution? Which streaming service(s) do you buy, and why? If you don’t pay for streaming service, why not?
Your thoughts on this topic are welcome. Post your comment or question below...
This article was posted by Bob Rankin on 15 Apr 2016
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Article information: AskBobRankin -- [KA-CHING] Time to Drop Netflix? (Posted: 15 Apr 2016)
Copyright © 2005 - Bob Rankin - All Rights Reserved