Why Netflix is changing its pricing strategy

Netflix is entering a new phase of its business and needs to start locking in profits.


November 19, 2020

If you’re a meticulous observer of your monthly credit card statement you may notice your recurring Netflix charge edge up this cycle.

A few weeks ago the streaming giant announced upcoming changes that will see plan prices increase by $1-2/mo.

While a buck or two more may seem small, the gradual increases will have a huge impact on profits when spread across Netflix’s 193M global subscribers.

An older, more mature Netflix

Roughly 18 months removed from its last price increase, what might seem like a standard bump comes at a critical time for the company.

With the world homebound during the 2020 lockdowns, Netflix saw a massive surge in demand, attracting almost 16m signups in Q1.

But during Q2 (July-September), Netflix managed just 2.2m signups — over a million fewer than Wall Street had projected.

Why jack up prices now?

According to Entertainment Strategy Guy — an anonymous media insider with an extremely descriptive name — Netflix has reached a mature phase of its business, prompting CEO Reed Hastings to shift the company’s focus from revenue to profit.

For many users, Netflix has become a more valued service during the pandemic.

But when normal times return and, you know, we can do things again, the platform’s pricing boost may see a moment of reckoning.

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