Netflix Price Hike Possible? Study Shows Users Willing To Pay Up To $15 Per Month

Netflix prices could increase drastically and a majority of customers would be willing to pay, according to a recent study. As reported in Variety, TiVo conducted a study among adult Netflix consumers that found that only 29.3 percent of respondents would be completely unwilling to pay increased amounts for continued access to Netflix.

The streaming service currently costs $10 per month for all Netflix subscribers, but 39.1 percent of respondents reported that they would be willing to pay within the $12-$15 range for a subscription. Interest in paying for Netflix dropped off at higher price points: while 21 percent said they would willingly pay more than $16 per month for Netflix, only 3 percent of respondents would pay more than $24.

Netflix CEO Reed Hastings delivers a keynote address at CES 2016.
LAS VEGAS, NV - JANUARY 06: Netflix CEO Reed Hastings delivers a keynote address at CES 2016 at The Venetian Las Vegas on January 6, 2016 in Las Vegas, Nevada. CES, the world's largest annual consumer technology trade show, runs through January 9 and is expected to feature 3,600 exhibitors showing off their latest products and services to more than 150,000 attendees. (Photo by Ethan Miller/Getty Images)

Subtracting the 10.6 percent of respondents who did not answer and the 29.3 percent unwilling to pay a higher price for Netflix, the survey found that a majority of Netflix users polled, 60.1 percent, would willingly pay more than $12, an increase of 20 percent over the current price, for continued use of the site. While Netflix currently has not released any plans at this time to increase their prices, the results of TiVo’s survey indicate that they would retain a majority of their current consumer base.

The potential Netflix price hike, hypothetical though it may be, would certainly fall in line with the rise in Netflix original programming. According to Business Insider, Netflix has continued to increasingly fund and produce original series and movies while licensing fewer non-exclusive titles. By 2017, there will be over 2,000 hours of original Netflix programming available to consumers, an increase to almost double the amount of content available currently.

A change in Netflix price would likely go towards the continued funding of these original series and not towards the addition of more licensed non-exclusive titles to the catalog. In an analysis of Netflix’s potential budget changes, Business Insider estimates that Netflix’s programming budget for original content will increase from $5 billion in 2016 to $7 billion in 2018, with the potential to grow as high as $9 billion in 2020. This is contrasted with its spending on licensed content, which appears to remain stagnant at $4 billion.

Image of Netflix on a laptop.

In October of last year, CEO Reed Hastings alluded to the possibility of a Netflix price hike in the near future. Hastings told Business Insider that customers are more willing to pay premium prices when Netflix provides more and higher-quality original content. He seemed confident in Netflix’s ability to withstand decreased demand due to price, arguing that “the more we have incredible value, the more we have amazing originals, then we are going to be able to ask consumers for more to be able to invest more.”

It makes sense that a change in Netflix price would accompany its pivot towards focusing the bulk of its programming budget on original content; in a world of apps and streaming services, there are plenty of other options available to consumers. Amazon Prime, Hulu, Netflix, and HBO Go all provide the same service: streaming television and film content. What sets each provider apart is the quality and originality of what it offers. A study by the Pew Research Center found that “15 percent of American adults are now ‘cord cutters’ – that is, they indicate that they once had a cable or satellite TV connection, but no longer subscribe” and that rates of cord cutting are highest among young adults: “one-sixth of young adults (16%) report they never had a cable or satellite subscription, while 19% ‘cut the cord.'” The fact that young people are more likely to stream content online means that Netflix will potentially see their user base grow in the future as more young people join the service. This could therefore justify a rise in Netflix price.

Netflix CEO Reed Hastings at CES 2016.
Netflix CEO Reed Hastings delivers a keynote address at CES 2016 at The Venetian Las Vegas on January 6, 2016 in Las Vegas, Nevada. CES, the world's largest annual consumer technology trade show, runs through January 9 and is expected to feature 3,600 exhibitors showing off their latest products and services to more than 150,000 attendees. (Photo by Ethan Miller/Getty Images)

If Netflix were to raise prices, however, they could face some serious backlash from long-time customers. As reported by the Hollywood Reporter, a Netflix subscriber recently sued the streaming giant for raising the prices on his account, complaining that “Netflix solicited persons to subscribe to Netflix’s streaming service by guaranteeing that Netflix would not increase monthly subscription prices as long as the subscribers maintained the subscription service continuously. Netflix has broken its contract with these subscribers by unilaterally raising monthly subscription prices.” So while a Netflix price increase might benefit some, it has certainly caused ire among many.

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