Netflix Raises Prices, New Challenges For Rivals

Historically, higher prices for any TV service -- cable, satellite and telco platforms -- can all be viewed as negative news.

But not for Netflix. News that it was raising prices on Tuesday -- anywhere from 12% to 18% -- pushed Netflix stock higher.

One could assume two things: One, that Netflix must believe it will continue to add new consumers in future quarters. Two, research suggests that consumers view Netflix as a great deal when it comes to TV content -- now, at most, just $16 a month.

When viewed against traditional pay TV systems' monthly prices -- around $80 to $120 depending on the service -- Netflix sounds like a great deal. In fact, those pay TV systems offer 200 channels on average -- much more content than what Netflix offers.

Still, the consumer "experience" helps Netflix beat older TV platforms in this regard -- $16 sounds a lot better than $120, any way you cut it.



Many analysts may feel Netflix’s move is wrapped around the idea that there is only so much consumer money for digital streaming. With the coming of big, OTT streaming platform efforts from Walt Disney (Disney+), WarnerMedia and NBCUniversal, Netflix is moving fast in consumer regard.

So let's ask the question: What will be the prices for competing streaming services be like -- $10, $15, or $5/month?

Existing streaming competitors seemed similarly priced to Netflix: Hulu is at $11.99/month for its advertising-free service; $7.99/month for it limited advertising service; and $39.99 for it Hulu Live with TV service (with advertising).

Perhaps we need to take a clue from what Amazon is doing. Priced at $119 a year (or $12.99/month), Amazon Prime -- with all that free shipping on consumer products -- gets you Prime Video for free.

Maybe that’s the key for future TV/video streamers: Tell consumers they are getting more of everything. Then tell them to go do some math.

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