One of the most attractive features about Netflix is its price. For a mere $10 a month, subscribers have instant access to thousands of hours of movies and TV shows. Not a bad deal.
But the recent “ungrandfathering” of accounts — i.e. after a grace period, the accounts that were paying $9 per month were now paying $10 — has raised a question in the minds of many: How much are you willing to pay for Netflix.
Subscribers’ limit appears to be $12-15 dollars, per the most recent consumer survey from research firm Digitalsmiths.
According to Digitalsmiths’ survey of 3,114 people in the U.S. and Canada, 39 percent would pay somewhere in that $12-15 range. The bad news is that 29 percent say they aren’t willing to endure any further increase at all.
After missing on subscriber growth expectations last quarter, that might be a bit of a worry for Netflix, as it mulls how to wring more money out of a possible saturated market like the U.S.
The streaming giant counts 36.05 million international subscribers and 47.1 million in the U.S. But growth in the U.S. is slowing, and the international segment is still hemorrhaging money ($173.4 million in the first six months of 2016). Netflix needs to be able to attract more subscribers who can pay premium prices.
Netflix currently owes studios an astonishing $13.2 billion in off-the-books commitments. Most of that is licensing deals for content that has already appeared elsewhere, but the streaming giant is also ramping up spending on Netflix exclusives like Baz Luhrmann‘s “The Get Down” ($120 million for six episodes) and the upcoming Queen Elizabeth drama “The Crown” (a reported £100 million, or around $131 million).
The Digitalsmiths report also revealed that 10.4 percent of respondents said they piggyback off acquaintances’ streaming accounts — sharing a password, rather than subscribing to these services themselves.
Netflix CEO Reed Hastings said at this year’s Consumer Electronics Show that many of Netflix’s password-moochers eventually get accounts of their own and that password sharing also aids in stopping subscribers from dropping the service. There’s a reason Netflix allows you to set up different viewer profiles, and, with the $10-a-month version, watch up to two HD streams at a time.
All the same, nothing gold can stay, and Netflix will eventually have to introduce another price increase.
The good news is these results don’t necessarily spell doom for Netflix: The trouble with survey-based research is that what people say doesn’t always jive with their behavior. It’s more useful as a guide to the customer’s mindset than a predictor of future actions.