Will Netflix Price Itself Out Of The Streaming Market?

If your reaction to Netflix raising their monthly subscription prices again is, “didn’t they do that not too long ago?” we’re with you. Raising prices for any streaming channel in the current times is a risky bet.

In fairness, based on the amount of new content Netflix is adding compared to all the other streaming services, they are worth the extra money.

The company’s decision to raise its standard plan by $1 per month, from $12.99 to $13.99, and its premium plan by $2 per month, from $15.99 to $17.99, is an essential part of Netflix’s long-term strategy. It’s why Netflix has a market valuation of $218 billion on just $2.8 billion of net income in the last 12 months.

Why Netflix will keep raising prices with confidence

Of course if you’re #1 already in your field, that will lessen the blow. And Netflix has a pretty good lead over just about everybody else, from a standpoint of a stable of ready new content and existing movies and TV shows to binge-watch.

They just keep adding more, more more, to the point where we questioned not long ago maybe they’re adding too much (see: Does Netflix Release Too Many Originals? Maybe Ask New CMO Bozoma Saint John)

The problem with adding too much is something new usually only gets one chance to be “new.” Then it can get lost in the archives. There are exceptions like TV shows that get to be new every time a new season, special or episode is released. Movie-wise, though, that one opportunity can be fleeting.

We like seeing around 3-5 new movies per week open in theaters. Right now due to the pandemic the number of new releases is one per week, sometimes two.

If I was in charge of organizing new movies for streaming channels, I’d focus on promoting and releasing 1-2 quality new movies (max) per week for the channel. If every streaming channel had one feature new movie per week, that would still be more than most moviegoers could see, but at least it wouldn’t be saturated.

What I mean by “quality” is very subjective. It’s not just a question of the budget, which we can go down a rabbit hole arguing larger budget equals higher quality, something I generally disagree with in concept. Yes, a larger budget can have bigger name actors, more special effects, but it doesn’t mean the story is going to be great. It could also mean a great story without any name actors or decent special effects won’t draw as large an audience. Special effects needed will vary upon the type of films being made of course.

For example, I’d label most of what Blumhouse is producing as “quality.” They shoot for lower budget and not all of their films are good, of course, but there is definitely an emphasis from that studio in getting the bang for their buck. Some other studios making movies on Netflix do not have as high filmmaking standards with similar or larger budgets.

As for a marketing and promotional strategy? Promote these new releases starting with an active campaign 90 days from the release date (release the first trailer, then a second trailer 45 days before) and increasing the amount of promotional activity incrementally until the week before and during which should be at the height of movie lover engagement. Would also buy ads in movie theaters, if allowed, even if it’s during that extended period before the previews begin. The Noovie segment, I think it’s called.

How many new movies would you like to see your favorite streaming channel release per month?

7 thoughts on “Will Netflix Price Itself Out Of The Streaming Market?

  1. Yeah, I saw this in the news and thought the same thing about an increase in price was a little too soon. But they have been pushing out new content more than any other streaming service. I think Amazon Prime and Apple TV+ is close behind. So when you think about that there is justification for the price increase. I am already seeing their holiday shows coming up in my email. They are a little cheesy but I like them for the ability to escape.

    Liked by 2 people

    1. We don’t normally start thinking about holiday movies that much until Thanksgiving, but guess that’s right around the corner, so their timing is pretty good there.

      I’d say HBO Max is up there with new content. They have a new movie — usually one that has been in theaters — just about every week. They have a decent number of TV series, miniseries and documentaries. Hulu adds more than Disney+ does, which is interesting considering Disney mostly owns them. Peacock is adding more.

      I think as soon as production catches up, we’re going to see a lot of new streaming content. Perhaps 2021 maybe a little later. More streamers are going to copy what Netflix is doing and it’s going to be up to us to divide the wheat from the chaff.

      Like

  2. I can appreciate the insane content creation rate, but I also feel like they’re losing their way a bit at the worst possible time in the race to trip over your own feet. They’ve even been quickly canceling shows and projects, contradicting the incubator environment that Netflix was famous for. As the other services expand (and ultimately fail and contract) in the market… Netflix should lay low and not upset the apple cart like this. It’s a dangerous game.

    Liked by 1 person

    1. I think the main reason they cancel shows after a couple seasons is that they become more expensive the more successful they are. Look at shows like Friends in the beginning the salaries of the actors and they were each making a million+ an episode the final few seasons. Netflix doesn’t have any ad dollars to fall back on to support the viewer success. It’s a model that doesn’t really support rewarding success like that.

      Not that I want to see Netflix adapt an ad model, but maybe they acquire an ad-supported channel and continue to develop successful TV shows on an ad-supported channel where the viewership increase to watch a show can give them additional revenue.

      Liked by 1 person

      1. I should add that I’m worried about Cobra Kai being canceled after the fourth season for this very reason (season three coming in 2021 and season 4 is greenlighted already, season 5 is unknown). It’s been mega popular but you just know that the two main stars are going to try and cash in on future seasons where when it wasn’t as popular on YouTube, Netflix could buy the archived content and make one new season. I don’t blame actors for ringing the cash register when they can, but the Netflix model is very different than traditional TV without major commercial buyers.

        Netflix “only” generated 2.1 billion and yet they spent something like five times that on new content. This is not a long term successful business model. Eventually something has to give if you spend five times what you make. I get it, everybody places (overstated) value on total subscribers but at the end of the day you have to make $$$ to stay in business. Netflix doesn’t have the ad play in their current model, hence my suggestion in the last comment that maybe they need to buy or create another channel where they can run ads.

        Another possibility is maybe they should do more ad placement inside their created content and make more $$$ that way? Can be more than a little obnoxious, especially if they go all in like NASCAR, but they need to find additional ways to increase revenue over just raising the subscription prices for existing customers. Eventually they will get to a price that some simply cannot afford. Am sure they are there with some customers already.

        Liked by 1 person

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