Netflix Inc. (NASDAQ:NFLX) has come under immense pressure in recent months amid a surge in competition in the streaming business. The likes of Comcast Corporation (NASDAQ:CMCSA) and Disney Co (NYSE:DIS) are increasingly eating into the company’s empire after years of operating as a monopoly. Amid the shocks, the company has hiked prices for its streaming plans, a development likely to trigger a reaction from subscribers.
The streaming giant has hiked prices for its standard plan, which will cost $13.99 up from $12.99. The premium plan that went for $15.99 will now cost subscribers $17.99. The price hikes will affect both current and new members.
However, new members who sign up will see updated prices while current users will receive a 30-day notification before the increased price comes into effect. The company attributes the price increase to ongoing plans to offer more variety of TV shows and films.
The last time that Netflix hiked plans was July last year. The increase resulted in the company losing 123,000 subscribers in the quarter. A similar fate could befall the company, given that the streaming space is seen as a surge in competition with new services cropping up by the day offering much affordable plans.
Likewise, the company is already experiencing a slowdown in growth when it comes to the addition of new subscribers. In the recent quarter, the company added 2.2 million net subscribers missing 2.5 million guidance.
The addition of new subscribers could slow even further, given that the company is facing a shortage of films and movies to offer. In the aftermath of the pandemic, the production of films and movies has been a big challenge. A number of films and movies have been canceled as production has become a big problem amid the stringent measure put to curb the spread of the virus.
Subscriber growth is important if Netflix is to generate additional revenue highly needed to expand the current content budget. The more the streaming giant invests in original programming, the more it will be able to increase its target market, likewise reduce the current subscriber churn rate.