This year there has been lot of buzz around Netflix as it has started to rise the price of it's service. Netflix has been very innovative and bold company, and so it is nice to cover it also in this blog, and especially since they have chosen to not show the ads. Same choice what we have made.
Netflix has been one of the companies that has managed to disrupt markets by introducing new kind of service and then expanding it boldly almost everywhere in the world.
As competitors are catching it up and program distribution costs are getting heavier (due to increased prices to greedy content holders) Netflix will need to start generating more money. They announced on April that they will start raising prices gradually over the year for their customers. Just one or two dollars, but as the service has been so cheap and so much used, even small changes are quite big and can affect to great many people. It was estimated that 3-4% of user base (so about 500.000 users) will drop the service, for that reason. So it is understandable that it generates lot of buzz as it affects to so many people. And, of course, in addition that it is one of the high valuated stocks, which high price is based mostly on the expected incomes in the future. Investors won't look it good if the company cannot continue growing it's user base.
AllFlicks (service that keeps tracks about all programs that a available in Netflix) made a user survey to find out that how well Netflix users would handle ads. According that survey 74% of Netflix subscribers would cancel the subscription if Netflix would introduce ads in it's service. That is big number and probably also badly skewed as the user survey was conducted in the Reddit service, which user base is known to be very hostile for any ads.
Newer the less, Netflix has chosen to rise the price of the service instead of starting to pushing ads for the viewers, and it looks that it was the right choice as the subscriber base has continued to grow regardless of the price hike.
Netflix raises prices instead of pushing ads for users
Netflix has been one of the companies that has managed to disrupt markets by introducing new kind of service and then expanding it boldly almost everywhere in the world.
As competitors are catching it up and program distribution costs are getting heavier (due to increased prices to greedy content holders) Netflix will need to start generating more money. They announced on April that they will start raising prices gradually over the year for their customers. Just one or two dollars, but as the service has been so cheap and so much used, even small changes are quite big and can affect to great many people. It was estimated that 3-4% of user base (so about 500.000 users) will drop the service, for that reason. So it is understandable that it generates lot of buzz as it affects to so many people. And, of course, in addition that it is one of the high valuated stocks, which high price is based mostly on the expected incomes in the future. Investors won't look it good if the company cannot continue growing it's user base.
AllFlicks (service that keeps tracks about all programs that a available in Netflix) made a user survey to find out that how well Netflix users would handle ads. According that survey 74% of Netflix subscribers would cancel the subscription if Netflix would introduce ads in it's service. That is big number and probably also badly skewed as the user survey was conducted in the Reddit service, which user base is known to be very hostile for any ads.
Newer the less, Netflix has chosen to rise the price of the service instead of starting to pushing ads for the viewers, and it looks that it was the right choice as the subscriber base has continued to grow regardless of the price hike.
Cheers,
WishSimply