Netflix is raising the price of their popular streaming service to $9.99 per month. This means that all Netflix subscribers will have to pay an extra 20% to keep watching the same service they have now. Is the price hike worth the extra $2 per month?
Netflix has grown from delivering DVDs to homes (does anyone get DVDs in the mail anymore?) to a full fledged movie and tv show streaming service. They recently started streaming content in 4k and have added a number of original movies and shows.
Watching movies at home has evolved. Once upon a time, if someone wanted to watch a movie on their TV, they drove down to their local Blockbuster video store, wandered the aisles until they found a movie that looked entertaining and rented a VHS tape for a few dollars. If the video was late, a daily charge would be applied and this often totaled more than the cost of the movie purchase. The video rental industry switched to DVDs and eventually Blu-Rays as people upgraded their home theaters to include HD flat screen TVs and hi-definition video projectors.
Redbox and Netflix killed the video store. Their ability to innovate with convenient kiosks at gas stations and McDonald’s restaurants along with Netflix’s cheap mail order DVD rental service ended Blockbuster Video. Other video store chains like Hollywood Video saw a similar fate.
Netflix shifted to streaming video as broadband saturation reached most homes. Smart TVs, set top boxes, and mobile devices enabled Netflix to be streamed on any screen in the home. They quickly dominated the video streaming market.
The cultural phenomenon called binge watching was created around Netflix’s full season streaming. As the streaming service started adding compelling original content, people could not consume it fast enough. It used to be that someone would worry about their friends disappearing for days, now they understand that they are probably binging on the latest season of House of Cards or Daredevil.
With Netflix’s price increase, will people stay with the service? Anyone with young children will probably continue to pay the extra amount so their kids do not revolt. Regular users and cable cord cutters might be ok with the price increase if Netflix continues to produce new content and delivers a better selection of newer movies.