Netflix's slump last quarter could be 'great news' for subscribers who hate price increases
- Competition among streaming-video subscriptions is heating up, and some experts say it could lead to lower prices in the industry.
- Netflix subscriber growth took a hit in the second quarter, in part because it raised prices in some places around the world.
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Netflix is bracing for a tidal wave of new competition from soon-to-launch services like Disney Plus and HBO Max. And it may mean fewer, or smaller, price increases from the streaming service and its rivals in the future.In the US, Netflix is already straddling the lower and higher end of what its competitors charge for comparable services.Advertisement
Netflix subscriptions cost between $8.99 and $15.99 per month in the US. Its cheapest plan is on par with competitors like Hulu's on-demand service and Amazon Prime Video, and its most expensive is slightly more than HBO Now.
Disney is planning to charge less for Disney Plus than Netflix - $6.99 per month - to attract signups with a more limited selection of series and movies that's geared toward families."There's no question that competition is going to lead to lower and lower pricing in the streaming landscape," Tuna Amobi, analyst at CFRA Research, told Business Insider. "It's great news for consumers."
Netflix squeezed in a price hike in the US before competition started heating up. It raised prices in January for new members by $1 to $2 for each of its plans. It rolled the new prices out to some existing members who were still paying the old fees, starting in April.In the second quarter Netflix lost subscribers in the US. The company blamed the weakness in subscriber growth globally on seasonality, releases that didn't deliver as many new members as anticipated, and a hangover from a stronger than expected first quarter. But it also said price bumps around the world played a part.Read more: Netflix lost subscribers in the US last quarter for the first time since 2011Advertisement
While more competition generally leads to lower prices, the internet's skinny-TV bundles may be a cautionary tale for the on-demand world.
Services like Sling TV, DirecTV Now, and YouTube TV sold deeply discounted TV packages to build audiences for their fledgling services. Most of them then had to raise prices or change their plans within a year or two of launching, so they could stay afloat as the cost of content went up.
Read Business Insider's full analysis of Netflix's pricing power and what it means for subscriber growth going forward:Netflix's price hikes help explain its terrible quarter and Wall Street analysts say it needs to be careful as new competitors spring upAdvertisement
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