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I’ve said this before, but I expect Netflix to continue to flex their muscle until they have an average subscription cost of $35-40/month. There’s so much room

I’ve said this before, but I expect Netflix to continue to flex their muscle until they have an average subscription cost of $35-40/month. There’s so much room in the entertainment market for them to save customers $50/mo, offer them more, and increase their revenue.

deleted 8y ago
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Phenomenit 8y ago
I would never pay more than the 10€ I pay now if the content quality and quantity they have at the moment persist, especially for us non US subscribers. Also I doubt they can keep it up, soon they and Amazon will go through all the culture written down and then what?
orev 8y ago
The market is on its way to fragmentation as more content producers move to have their own apps instead of going through an intermediary. And they all want $10-$15 a month. It won’t be long before people refuse to pay for more apps, as the total cost of both the Internet connection and all app subscriptions surpasses the price they used to pay for cable. That is what limits the price any one app can charge.
- Pharmakon 8y ago
  I think you’re right, and then we’ll see a cycle of renewed piracy, followed by the grudging realization that making some money is better than making no money. It took a while to crack the music industry, but the same inevitable forces are ultimately at play here.
  - 40acres 8y ago
    For most casual consumers piracy is an inefficient way of getting content, even in the hay-day of piracy I'd bet that most consumers were getting their content via normal channels. A slight uptick in piracy may occur for the technically minded, but most consumers will pay for the convenience of streaming.
    - Pharmakon 8y ago
      Things like Kodi boxes and steaming piracy sites have really changed the landscape. I find that many pirates today are not technical, might not know what bittorrent is, and find the whole experience to be roughly like any streaming service.
      - quicklyfrozen 8y ago
        It's arguably a better experience if you don't need to be aware of which platform each piece of content is streaming on. And I'd rather see IMDB ratings then the rather meaningless "this is a 92% match for you."
    - paulie_a 8y ago
      I find piracy to be faster in many cases. Between a nzb downloader and a Kodi plug-in with a drebid service I'll be streaming something just as fast as you don't find it on Netflix.
    - AdrianB1 8y ago
      You would be amazed to know how piracy became consumer grade in the past few years; I heard about streaming sites from non-technical people that were watching their favorite shows there because there was no official way to do it otherwise. Outside top 2-3 markets, most online streaming services have a serious delay that is no longer accepted by consumers, so they turn to piracy. Why wait 1-2 years to see the last episode of Game of Thrones on official channels when you can see it next week on pirate sites?
- BurningFrog 8y ago
  Yeah, they all want $10-$15 a month, but I doubt many will get it. We'll see.
- deathanatos 8y ago
  Perhaps. But we just recently tried CBS's streaming service, and it was terrible. AFAICT, only 720p, and the encoder they used appears to have had the quality set to "potato" (blurry, tons of what look like interlacing jaggies during rapid motion). It made me really appreciate how good of a job Netflix is doing on the technical side of things.
  - orev 8y ago
    I have not seen it myself, but CBS is the clear loser of all the apps. They seem to be trying to build a pay service on the back of Star Trek (maybe they think the Internet is just for nerds?) and everything else they have is free content OTA anyway.
    - FiveSquared 8y ago
      Yep, besides, why not just watch the OG Star Trek reruns (if they still do that, I don’t really follow Star Trek anymore) or pirate if the app is so crappy? And OTA.
  - ClassyJacket 8y ago
    I can't really agree with that. Their 1080p content doesn't look anywhere near as good as a BluRay, and their 4k is indistinguishable from 1080p. I'm often frustrated with the compression artifacts and colour banding, especially on low contrast frames like dark scenes or fade ins from black.
ballenf 8y ago
For me Netflix isn’t competing against cable (its been 15 years since I subscribed) but against YouTube and small mobile games that I can play a few minutes here and there. In that light they are already a little too expensive for the value to me for a yearlong subscription. Instead I’ll subscribe for a few months and then cancel when I realize I’ve been paying without watching anything for weeks.
- pbhjpbhj 8y ago
  There was a story on HN a week or so ago about Netflix's main competitor being Fortnite.
zaroth 8y ago
I can speak for myself, at that price I need to get live streaming as well as on-demand.
deleted 8y ago
[deleted]
adventured 8y ago
> until they have an average subscription cost of $35-40/month That's impossible. 3/4 or more of their total customer base for the future is outside of the US. The economic middle 50% and the top 50% of people in Brazil, Indonesia, India, Turkey, Vietnam, Thailand, China, Nigeria, Mexico, Colombia, Russia, Bangladesh, Philippines, Ethiopia, and about 140 other countries - can't and will not pay an average of $35-$40 / month (or say ~$25-$30 if we're assuming an average lifted by higher prices in affluent nations; that requires eg the US market to pay far higher prices beyond $35-$40). Not under any circumstances will any of that happen. Netflix will be able to raise prices in the non-rich markets (ie most of their customer base of the future) only as economic growth allows for it, both at the global and local levels. Customers in Brazil aren't going to suddenly be able to jump from $5 / month to $25 in the next ten years, no matter how much good content Netflix puts up. Western European customers, who could largely technically afford $35-$40 per month, will never accept those prices. Netflix is pushing near the edge of what people will pay right now globally. They can maybe raise prices in the US another 25% over several years before hitting the ceiling in their most lucrative market. The US market represents a rough approximation of their maximum pricing power. There's no scenario where they retain their customer base in the US and charge $35-$40 (unless we're talking about 50 more years of inflation).
magicalhippo 8y ago
I doubt that. Keeping subscription cost low means people will not view it as a huge expense and are much more likely to keep the subscription rather than cancel it, even if they use it very little. There's a line though, where it moves on over into the high-enough-to-notice expense category, where people will be much more inclined to cancel if they're not using it significantly. If Netflix had cost me $20 or more a month, I would have cancelled it long ago, and only subscribe for a month a year to binge. I'm betting Netflix want to stay in that first category for as long as they can.
- bonesss 8y ago
  I think tiered pricing makes more sense at that level of subscription. Netflix is global, so at some level their product and pricing has to reflect what the "lower middle class" in Turkey, China, and Brazil can bear. We know that cable providers have succeeded in getting more for less in this market, so Netflix could profitably charge more for more in some regions. I would guess that divide can't be reconciled, but by launching another layer of content/service at a higher price-per-month could let them maximize revenue. Netflix+ or something, paired to exploit some newer technology that isn't central to other services...
thirdsun 8y ago
And one way to get there might be live sports. The money I throw at Sky Germany to be able to watch Bundesliga (football - don't call it soccer.) is ridiculous - I'd be happy to spent a fair share of that amount to watch it via Netflix. I'm currently subscribed to DAZN, a european live sports streaming service that covers all kinds of international sports and leagues and for 10 € monthly the available content is stunning. Having that content on Netflix would be very welcome, particularly due to their better streaming technology which is very important when it comes to live streaming.

deleted 8y ago

[deleted]

Phenomenit 8y ago

I would never pay more than the 10€ I pay now if the content quality and quantity they have at the moment persist, especially for us non US subscribers. Also I doubt they can keep it up, soon they and Amazon will go through all the culture written down and then what?

orev 8y ago

The market is on its way to fragmentation as more content producers move to have their own apps instead of going through an intermediary. And they all want $10-$15 a month. It won’t be long before people refuse to pay for more apps, as the total cost of both the Internet connection and all app subscriptions surpasses the price they used to pay for cable. That is what limits the price any one app can charge.

Pharmakon 8y ago
I think you’re right, and then we’ll see a cycle of renewed piracy, followed by the grudging realization that making some money is better than making no money. It took a while to crack the music industry, but the same inevitable forces are ultimately at play here.
- 40acres 8y ago
  For most casual consumers piracy is an inefficient way of getting content, even in the hay-day of piracy I'd bet that most consumers were getting their content via normal channels. A slight uptick in piracy may occur for the technically minded, but most consumers will pay for the convenience of streaming.
  - Pharmakon 8y ago
    Things like Kodi boxes and steaming piracy sites have really changed the landscape. I find that many pirates today are not technical, might not know what bittorrent is, and find the whole experience to be roughly like any streaming service.
    - quicklyfrozen 8y ago
      It's arguably a better experience if you don't need to be aware of which platform each piece of content is streaming on. And I'd rather see IMDB ratings then the rather meaningless "this is a 92% match for you."
  - paulie_a 8y ago
    I find piracy to be faster in many cases. Between a nzb downloader and a Kodi plug-in with a drebid service I'll be streaming something just as fast as you don't find it on Netflix.
  - AdrianB1 8y ago
    You would be amazed to know how piracy became consumer grade in the past few years; I heard about streaming sites from non-technical people that were watching their favorite shows there because there was no official way to do it otherwise. Outside top 2-3 markets, most online streaming services have a serious delay that is no longer accepted by consumers, so they turn to piracy. Why wait 1-2 years to see the last episode of Game of Thrones on official channels when you can see it next week on pirate sites?
BurningFrog 8y ago
Yeah, they all want $10-$15 a month, but I doubt many will get it. We'll see.
deathanatos 8y ago
Perhaps. But we just recently tried CBS's streaming service, and it was terrible. AFAICT, only 720p, and the encoder they used appears to have had the quality set to "potato" (blurry, tons of what look like interlacing jaggies during rapid motion). It made me really appreciate how good of a job Netflix is doing on the technical side of things.
- orev 8y ago
  I have not seen it myself, but CBS is the clear loser of all the apps. They seem to be trying to build a pay service on the back of Star Trek (maybe they think the Internet is just for nerds?) and everything else they have is free content OTA anyway.
  - FiveSquared 8y ago
    Yep, besides, why not just watch the OG Star Trek reruns (if they still do that, I don’t really follow Star Trek anymore) or pirate if the app is so crappy? And OTA.
- ClassyJacket 8y ago
  I can't really agree with that. Their 1080p content doesn't look anywhere near as good as a BluRay, and their 4k is indistinguishable from 1080p. I'm often frustrated with the compression artifacts and colour banding, especially on low contrast frames like dark scenes or fade ins from black.

ballenf 8y ago

For me Netflix isn’t competing against cable (its been 15 years since I subscribed) but against YouTube and small mobile games that I can play a few minutes here and there. In that light they are already a little too expensive for the value to me for a yearlong subscription. Instead I’ll subscribe for a few months and then cancel when I realize I’ve been paying without watching anything for weeks.

pbhjpbhj 8y ago
There was a story on HN a week or so ago about Netflix's main competitor being Fortnite.

zaroth 8y ago

I can speak for myself, at that price I need to get live streaming as well as on-demand.

deleted 8y ago

[deleted]

adventured 8y ago

> until they have an average subscription cost of $35-40/month That's impossible. 3/4 or more of their total customer base for the future is outside of the US. The economic middle 50% and the top 50% of people in Brazil, Indonesia, India, Turkey, Vietnam, Thailand, China, Nigeria, Mexico, Colombia, Russia, Bangladesh, Philippines, Ethiopia, and about 140 other countries - can't and will not pay an average of $35-$40 / month (or say ~$25-$30 if we're assuming an average lifted by higher prices in affluent nations; that requires eg the US market to pay far higher prices beyond $35-$40). Not under any circumstances will any of that happen. Netflix will be able to raise prices in the non-rich markets (ie most of their customer base of the future) only as economic growth allows for it, both at the global and local levels. Customers in Brazil aren't going to suddenly be able to jump from $5 / month to $25 in the next ten years, no matter how much good content Netflix puts up. Western European customers, who could largely technically afford $35-$40 per month, will never accept those prices. Netflix is pushing near the edge of what people will pay right now globally. They can maybe raise prices in the US another 25% over several years before hitting the ceiling in their most lucrative market. The US market represents a rough approximation of their maximum pricing power. There's no scenario where they retain their customer base in the US and charge $35-$40 (unless we're talking about 50 more years of inflation).

magicalhippo 8y ago

I doubt that. Keeping subscription cost low means people will not view it as a huge expense and are much more likely to keep the subscription rather than cancel it, even if they use it very little. There's a line though, where it moves on over into the high-enough-to-notice expense category, where people will be much more inclined to cancel if they're not using it significantly. If Netflix had cost me $20 or more a month, I would have cancelled it long ago, and only subscribe for a month a year to binge. I'm betting Netflix want to stay in that first category for as long as they can.

bonesss 8y ago
I think tiered pricing makes more sense at that level of subscription. Netflix is global, so at some level their product and pricing has to reflect what the "lower middle class" in Turkey, China, and Brazil can bear. We know that cable providers have succeeded in getting more for less in this market, so Netflix could profitably charge more for more in some regions. I would guess that divide can't be reconciled, but by launching another layer of content/service at a higher price-per-month could let them maximize revenue. Netflix+ or something, paired to exploit some newer technology that isn't central to other services...

thirdsun 8y ago

And one way to get there might be live sports. The money I throw at Sky Germany to be able to watch Bundesliga (football - don't call it soccer.) is ridiculous - I'd be happy to spent a fair share of that amount to watch it via Netflix. I'm currently subscribed to DAZN, a european live sports streaming service that covers all kinds of international sports and leagues and for 10 € monthly the available content is stunning. Having that content on Netflix would be very welcome, particularly due to their better streaming technology which is very important when it comes to live streaming.