Netflix Could Lose 9% Of Subs to Price Hike: Study
News about Netflix’s plan to raise prices spread quickly and about 9% of the streaming giant’s subscribers said they would drop their membership entirely, according to a survey taken by the Hub.
According to the survey 70% of Netflix’s sub were aware of the price hike two days after the announcement was made.
The good news for Netflix was that 69% of those surveyed said they’d keep their subscription as is, and 16% said they’d drop to a lower tier. While 9% said they’ll cancel Netflix, another 6% said they consider upgrading the subscription to a higher tier.
“In some respects, the timing of the price hike announcement couldn’t have been better for Netflix, coming on the heels of its enormous viewership success with Bird Box, the buzz it’s generated with Bandersnatch, and its strong subscriber growth in Q4 2018,” said Peter Fondulas, principal at Hub and co-author of the study. “But in an increasingly competitive SVOD marketplace, even a $1-$2 price increase can lead subscribers to start considering alternatives.”
Among subscribers already on the lowest Netflix tier--or basic-- 76% said they’d keep their current plan and 12% considering an upgrade. Among those on the Standard plan, 24% said they’ll downgrade to basic and 27% of those on the premium plans said they plan to downgrade.
Ask how they were reacting to the price increase, 8% picked angry, 38% chose annoyed, 39% selected accepting and 15% said they were positive and expected Netflix to provide better content and service.
“This research shows that Reed Hastings is right when he says that consumers choose based on value, not just price”, said Jon Giegengack, principal at Hub. “Despite the increase, the great majority of customers say they’ll keep their subscription. However, the fact that half are unhappy shows that Netflix can’t raise prices indefinitely, and that higher fees make delivering on the promise of high-quality exclusive content more important than ever.”
Hub said it surveyed 415 adults in the U.S. who have a Netflix subscription that they pay for between Jan. 17 and 18.
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.