Commentary

Rising Consumer Video Prices: No Problem For Netflix, But What About For Comcast?

User price increases for digital video? No problem -- for Netflix.

The content provider reached 50 million worldwide subscribers in the second quarter, including 36.2 million in the U.S -- despite a price increase some months ago to $9 a month for new customers (its $8 monthly price tag sticks for existing users).

A year earlier, Netflix had 37.5 million subscribers worldwide and 29.8 million in the U.S. 

It wasn’t that long ago, back in 2011, that Netflix  announced another price change -- splitting its streaming and DVD business -- which would, in effect, double consumers’ monthly price.

Netflix has learned lots since then. And, giving credit where it’s due, the company was able to turn around sentiment from its long-time very loyal customers.

Could the same be said about big traditional TV distributors?

Yes, we are comparing decaying apples and thriving oranges, but take Comcast, for example. In the second quarter, the big cable company lost some 144,000 video customers – but revenues from that business grew 1.2% to $5.24 billion.

Many TV distributors tout higher average per-subscriber revenues. And, to be fair, paying $100 or $120 a month for a full-fledged service with hundreds of channels is very different from buying essentially one channel for $9 a month.

Given the soaring price tag of pay TV overall, it’s no wonder consumers can offer a good ear in listening to Netflix, Aereo, Hulu Plus, or some other alternative.

The economy is better. But not exactly good enough when a household’s monthly price tag for TV services seemingly grows faster than inflation -- no matter how much “additional” value those TV distributors bring to the table.

Current scorecard: Aereo is gone; Netflix continues to gain; and traditional TV players look to tread lightly when it comes to consumer price perception.

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