Could Netflix raise prices even higher? 21% of users would pay $16 or more per month
Netflix is in the midst of shifting millions of U.S. subscribers to its standard $10 per month two-stream HD plan — and it blamed higher churn and lower sub growth in the second quarter in large part on the price hike.
But a new survey indicates the No. 1 subscription VOD provider still has a lot of pricing power left in its bag of tricks: 21% of Netflix customers said they would pay $16 or more per month for the streaming service, according to a survey by TiVo's Digitalsmiths unit, which polled 3,114 adults in the U.S. and Canada in Q2 2016.
At the same time, 29.3% of respondents said they would refuse to pay any more than for Netflix they're currently shelling out, per the Digitalsmiths survey. And 39.1% said they would pay, at most, $12-$15 monthly (while 10.6% did not provide an answer).
For now, don't expect Netflix to make major adjustments on how much it charges — the risk of a massive subscriber exodus outweighs any upside. One disgruntled Netflix user is even suing the company over the latest price increase, alleging the company promised him a lifetime guarantee that rates would not go up.
But the survey results show that in the years ahead, as Netflix keeps adding more exclusive and original content — next year it plans to spend more than its projected $6 billion budget in 2016 — it will have leeway to raise prices further.
Netflix's potential runway to raise prices is also clear when you look at what people spend on pay TV. About 35% of consumers Digitalsmiths surveyed said they spend $100 or more on cable or satellite TV per month, while 49% pay $51-$100 per month; 16% said they spend less than $50 on pay TV.
Still, people today spend a lot more time watching conventional TV than streaming video. About 59% of SVOD users watch two hours or less of content on those services per day; only 4.8% watching 5 or more hours daily, according to the survey — while the average U.S. household watched about 4.5 hours of traditional TV each day in the first quarter of 2016, per Nielsen. Of respondents who use SVOD services, 92.8% do so on a weekly basis.
Meanwhile, the Digitalsmiths survey found that 10.4% of Netflix and other SVOD users don't pay for their service because they use another subscriber's account. While a recent federal court ruling technically makes unauthorized sharing of passwords to an internet service illegal, Netflix and other providers say such multi-user access is kosher within certain bounds.
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