Netflix price hike is good for them, just not for us
CONNOR BOULET, STAFF WRITER
Photo courtesy of Unsplash.com
Many cried foul when Netflix upped the price of its more expensive subscriptions on October 19, 2017. A conclusion one might draw from this is that the online streaming service is on a downward slide. To justify poor investments in programming, the service decides to make back some of that money by charging their customers more. However, this is not true in the slightest.
Financially, Netflix is performing as well as ever. They’ve accumulated even more subscribers in the third fiscal quarter than many analysts expected them to. With the price hike they’ve enforced in the U.S.A and many other countries, their profits are expected to increase despite the inevitable slight decrease in subscriber growth. Netflix shares increased to $204.21 on the 18th, a 0.8 percent increase.
The question is obvious; if Netflix continues to foster greater and greater success, why do they need a price increase? The answer is simple; Netflix needs more money to fund the huge amount of original programming the network hopes to release in 2018. They plan to invest $6 to $8 billion dollars in said content. To help further such plans, it’s only natural the company would elevate revenue by rising the prices for their consumers.
This reasoning is indicative of a trend in Netflix programming over the past couple of years. In 2016, Netflix expressed that their goal was for half of their programming to be exclusive, Netflix original programming, a stark contrast from the myriad of movies and television shows they licensed in the past. However, producing original content wholesale and acquiring the exclusive rights to use said content is not cheap. Considering the accelerated costs oncoming for the company, a price hike for subscribers is to be expected.
This move has raised concerns, however. Several analysts from Wall Street find this ever-growing cash burn to be a bad omen. Indeed, such an investment does not come without risk. But, if Netflix’s ambitions carry out as planned, the service will have a plethora of diverse content for its subscriber base to latch on to. If the massive success its exclusive content has attained is any indication, this move is definitively the right one.
