Investment research company Jefferies believes a rate increase for the streaming service offered by Netflix may be imminent. Specifically, analyst Brent Thill wrote a piece this week suggesting a price hike is “probable in the near to mid-term.” Depending on which markets it imposes higher prices, the move could bolster 2021’s top line by hundreds of millions of dollars. Some of Thill’s scenarios for what monetary effect such a price hike would create suggest it could translate into annual revenue growth on the order of $1 billion. Not bad.
Of all the times for Netflix to raise prices though, now isn’t it.
Overcoming previous price increases
Netflix’s past price increases have been met with mixed results. The company’s 2016 rate increase was followed by a near-stagnation of its previously hot U.S. subscriber growth during the second and third quarters of that year. Its 2017 price increase, on the other hand, didn’t seem to impact subscriber growth in any measurable way.
That more recent response may be a sign that consumers may have grown accustomed to Netflix’s occasional price hike, particularity given how the company sailed through its 2019 rate increase. That’s when Netflix lifted the monthly subscription cost for its cheapest plan from $7.99 to $8.99, while boosting its priciest plan — which allows a household to watch ultra-high-definition video on up to four different devices at once — from $13.99 to $15.99 a month. All told, the company added 1.74 million U.S. users during the first quarter of the year, and 7.86 million international users despite the impending price increase.
Even after the rate hike went into effect during Q2 though, the sting was modest and short-lived. While its U.S. headcount was stagnant for the quarter in question, it was offset by international customer growth of 2.83 million. And,