Q. I heard on the news this morning that Netflix is raising prices again! Is that possible? Seems like they just raised prices. If they are raising them, I think I will go with Peacock for awhile. — Ted, Saint Clairsville, Ohio.
Ted, Netflix has not raised its price, but it’s possible that it will in the coming weeks, or months. Let me explain.
First, Netflix has not raised prices since January 2019. At that time, Netflix’s premium plan, which includes 4K programming and four simultaneous streams, rose from $13.99 a month to $15.99 a month while the streamer’s standard plan, which includes two streams and high-def programming (but no 4K), increased from $10.99 a month to $12.99 a month.
So why did you hear that Netflix is raising prices now?
Alex Giaimo, a Jefferies stock analyst, issued a note to his clients today that suggested Netflix is contemplating a near-term price hike. Considering that it’s been 20 months since Netflix’s last rate increase, it’s not a wild forecast.
“After a change in language regarding pricing on the (Netflix’s second-quarter telephone call with analysts) call, we believe a potential hike is probable in the near to midterm,” Giaimo said, according to Investors.com. “In Q1, Netflix said that they were ‘not even thinking about price increases.”
Giaimo believes that Netflix would not be significantly hurt by a price hike now despite the recent launch of three powerful new rivals, Peacock, Disney Plus and HBO Max. I assume the analyst didn’t talk to you, Ted, but he believes that most Netflix subscribers would accept a rate increase because they are so wed to the streamer’s ever-expanding lineup of original programming.
But let me give you one reason why Netflix may not increases prices in the near future.
Well, two reasons, actually. Peacock and Disney Plus.
Peacock, which is owned by NBC, offers more than 15,000 hours of programming for free while its ad-included $4.99-a-month plan has more than 20,000 hours. Disney Plus, which carries the extensive Disney movie library as well as new shows such as Hamilton and Mandalorian, is available for just $6;.99 a month.
Netflix might want to wait until Disney and Peacock raise their prices before implementing its own increase. Otherwise, they could gain a competitive advantage.
But we’ll see, won’t we?
Ted, hope that helps. Happy viewing, and stay safe!
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— Phillip Swann