For years, we have looked at the evolution of Netflix’s business model. See, for example, 1 and 2. Today, we look at Netflix pricing over time. Consumers have sometimes expressed dissatisfaction with the firm’s price hikes.
A Business Model Evolves: Netflix Pricing Over Time
To start, how can we describe Netflix’s overall evolution? First, its service model has changed from an emphasis on renting physical DVDs via snail mail to a focus on streaming services. Second, Netflix has added services such as its own original movies. Roma falls into that category. Third, recent price hikes reflect the expanded services offered by Netflix. And that shows a price-quality relationship.
Now, let’s look at the history of Netflix pricing. As reported by Felix Richter for Statista:
“In a move that disgruntled some customers but delighted many shareholders, Netflix raised the prices for its U.S. streaming subscribers tin January. For the first time in its history, the company raised the prices for all three streaming plans. And this included the highest-ever increase for the most popular standard plan, allowing HD streaming on up to two devices simultaneously.”
“Having last increased its prices in the fall of 2017, Netflix felt it was due another price hike. Why? To ‘continue investing in great entertainment and improving the overall Netflix experience.”. In defending its position as the world’s most popular streaming platform, Netflix has invested heavily in original and licensed content. In the first nine months of 2018 alone, Netflix spent $8.5 billion in cash on streaming content. That investment will pay off in the long run as long as the company continues to grow its international subscriber base.”
The Statista chart below highlights Netflix pricing from November 2010 to January 2019.