Because they now offer more content, at a higher quality, with greater convenience than when they first started. It is also perceived as high value socially, so

Because they now offer more content, at a higher quality, with greater convenience than when they first started. It is also perceived as high value socially, something you should obviously have. This wasn't always the case, and the price had to be lower to reflect that - or some people would not pay it. I'm sure before Netflix raises prices, they ask themselves the question "what % of our subscriber base will we lose, and how much will it hurt the growth rate?" Presumably, they also do some research. For Netflix, previous subscribers were slowly grandfathered in to the new prices, while new subscriptions paid the full price immediately. I imagine that allowed them to measure the impact on growth and churn before affecting their entire user base, allowing them to reverse the change if they saw it was a big mistake. Since they haven't reversed the change, one can only assume that it didn't have a big enough effect to justify keeping the previous pricing. Ergo, people consider it to be worth the money. I know I do. Finally, presumably they arrived at the previous price point by playing with prices, content and advertising until they arrived at a sufficiently large growth rate, so they were at the right price for that time. But many variables have changed since.