[KA-CHING] Time to Drop Netflix?

Category: Television

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.

Netflix, Amazon Video and Hulu

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...

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Most recent comments on "[KA-CHING] Time to Drop Netflix?"

(See all 50 comments for this article.)

Posted by:

16 Apr 2016

I'll stick with over the air tv. Living in the Chicago area there's more than enough stations to find something to watch and who wants to be glued to the TV 24/7?

Posted by:

16 Apr 2016

I'm am Amazon Prime member for the shipping, but one original Amazon show I've liked is Bosch. If you like cop shows, give it a try. The second season wasn't as good as the first.

Thanks for the reminder about Netflix, Bob.

Posted by:

16 Apr 2016

In Canada, Netflix selection is not as good as with the U.S. version. They have competition now from Shomi (a Netflix like streaming service jointly owned by the 2 largest Canadian cable services). I think it is an attempt to drive Netflix out of Canada at which time they would jack up prices. I cut cable years ago and as others have mentioned, feel the price of Netflix is a bargain.

Posted by:

16 Apr 2016

Content is king. HD is overrated. Don't mind the price increase as long as the content is there. Netflix's original series are much better that the networks. At least these are not all structured for five minute sections with a grabber scene to keep you sitting through four or more minutes of commercials. TV shows were much better in the pre-Reagan years when the stations only had ten minutes every hour for commercials.

Posted by:

16 Apr 2016

Alpha House on Amazon is great but I have seen little else to excite me.

Posted by:

16 Apr 2016

Thanks for the article. I have been quite pleased with the Netflix and my better half is kept pretty comfortable with both Amazon and the other selections on ROKU.
AT&T UVERSE is about start a broadband allocation program and has not told the customers the down sides yet. Perhaps you have ways or connections to unfold the big secret here. I'm sure it's not all about trying to get people to bundle.
Thanks Again, Phil

Posted by:

16 Apr 2016

Never had cable - never will. Why would I pay to have all of those commercials pumped into my house?? I've had Netflix dvd since day one. We get the latest titles faster. We use an antenna for almost 60 local channels and that's too much to keep up with as it is! oh, yeah, we have Ooma, Tracfone and I refill my ink tanks LOL! Frugality, reality and practicality go hand in hand around here. (ymmv)

Posted by:

16 Apr 2016

Why does anyone pay to watch movies? stop paying & they will all go out of business.

Posted by:

16 Apr 2016

Living in Central America at this time, Netflix is a life-saver and an absolut must for me!

Posted by:

16 Apr 2016

Netflix makes us pay more here for far less available content in Australia. Many of us resorted to using a VPN to get full access until they blocked it recently.
Consequently we have downgraded back to just their basic plan for the limited offerings.

Posted by:

16 Apr 2016

Just heard... buy cheap Android tablet...hookup HDMI to tv. Download Showbox... Get all movies free.. any confirmation?

EDITOR'S NOTE: Have not heard of Showbox, but what you describe cannot be legal.

Posted by:

16 Apr 2016

I do not understand any of the options or their differences. Would love to see you write an article explaining all of the different types and their differences.

Posted by:

17 Apr 2016

I second Audris comment. I am 73 and don't understand most of this stuff! My 14 year old grandson wants me to get Netflix rather than up-grade my cable to 200 plus channels.
And what is ROKU???
I can't even get a router to work so I can use the tablet they gave me!
An article explaining all this would be nice.
Thanks.....enjoy your day.

Posted by:

17 Apr 2016

Oddly enough I dropped Netflix for the same show that initially got me to subscribe: House of Cards. As an animal welfare activist I was deeply disturbed by the unnecessary and gross animal cruelty references. From episode one's neck breaking of a dog that had been hit by a car ... what, no veterinarians there? ... to the last episode I watched with its disgusting description of the torture of pigs scheduled to end up as barbecue. I think the dog incident was to establish in viewers mind the core personality of the lead character but still there are better ways. The pig thing was just too disgusting to go into. It was a great show, but those glaring sensationalizations of animal cruelty turned me off more than all the good stuff turned me on, so (sigh) buh-bye, Netflix.

Posted by:

17 Apr 2016

Have been a $11.99 subscriber to Netflix for awhile now because there are 5 of us using the account. It's a good value for us. Because of business, we also use Amazon Prime for shipping and utilize the programming too. With having our HOA paying for basic cable, we see these two services as a good value for our dollar.

Posted by:

17 Apr 2016

I get my Cable and Internet service from Cox Cable. It costs $123 a month for basic cable, no premium channels like HBO or Showtime. A few months back they sent a notice that my bill was going up $20 a month. I called them and they agreed to keep it at $123 if I agreed NOT to change to another provider for the next two years. Last week I got a new notice from Cox that I'm going to lose all my cable channels come June if I don't "rent" a $2.99 "mini-box" for each TV in my home. I currently have no cable boxes of any kind, and now I'll have to rent 5 boxes, one for each TV in our home just to continue receiving the channels I'm currently getting. These boxes push my bill to $138 a month. If I want a DVR to record shows, that will cost me another $23 a month pushing the total to $161 a month. Currently we use VCRs to record shows on different channels that we would like to watch but I understand that the VCRs may not work with these new mini-boxes. I'd like to see some of the new shows being offered by the likes of Netflix and Amazon, but that would increase the cost of TV viewing to $180+ a month depending upon the number of content providers you sign up with. Who can afford $180 a month to watch TV? Regarding Netflix in particular I don't think its worth the price to watch old movies and TV shows that I've already seen at the movies or rented via Red Box, and I'm not really interested in their new shows with perhaps the exception being the Daredevil show.

Posted by:

18 Apr 2016

Love my Netflix. We do both the DVDs and the streaming. It's still a bargain. We have Amazon Prime, mostly for the shipping, but the video is an added attraction. I don't think it comes close to Netflix, but there are still some things worth watching.

We cut cable/dish 4 years ago and have never looked back. The ONLY thing we miss is our local Fox Sports channel which carries our local baseball and hockey. Oh, well, we just listen on the radio instead.

I echo those wishing that there were more old classics films available on the services. But as a suggestion? I've found many of them available from our public library! I was really surprised by the selection. Maybe you would be lucky, too!

Posted by:

19 Apr 2016

As a foreign and classic film lover, I was thrilled to discover the Criterion collection on Hulu. I also subscribe to Mubi.

Posted by:

01 May 2016

I cut the cord over a year ago and will never go back! I have a Roku with both Amazon & Netflix plus many other channels including YouTube etc! For local stations I have an antenna but I don't need to use it too often. I also have a channel that I added to my Roku that allows me to watch some other streaming content...yes, I admit, not entirely legal:( I actually have access to so much content that I usually say I have content overload :) I share the Netflix w/my son & he also runs it at his business and at his home he also has Roku. So we feel completely satisfied for under $20 a month!!!

Posted by:

11 Jul 2018

Do you have any comments that aren't two years old ??

EDITOR'S NOTE: Well, since this article was published two years ago, the hubbub seems to have died down. But there are several hundred new articles published on this site since then.

There's more reader feedback... See all 50 comments for this article.

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