In business, the economic law of supply and demand takes precedence when a good is selling well. Following this law Netflix will be raising its prices in 2019.
According to USA today, the prices of Netflix’s most popular plan, previously $10.99 per month, will rise to $12.99. The cheapest plan, which is $7.99, will now be $8.99. The premium option will rise to $15.99 per month, from $13.99.
The price hike is coming at a time where, according to Vice news, the company is $12 million in debt. A large reason for this is because of the large amounts of original content Netflix creates on a yearly basis. While most of the content is good, it is not generating enough money to help the company get out of debt.
While the debt is daunting for the company, I feel that scrapping all of the company’s original content is not the best way to go. Some of Netflix’s audience would rather be watching something new rather than something everyone has seen before. Yet, the company should consider creating less original content for the sake of trying to earn money to pay off the debt.
For new subscribers to Netflix, the price jump will be taking place immediately. If you already have a subscription, then your price will increase within the next three months.
For the most part I agree with this strategy, especially in terms of who are already subscribed. The one change I would make is waiting to increase the price for new subscribers. Attracting new customers without a price increase provides a higher chance that they will remain with the service, and also pay the increased price after determining the quality of the service.
The price jump of Netflix is justified and will remain justified until there is a drop of quality. Netflix has been known for producing high quality entertainment with its own collection of movies, as well as releasing other movies for subscribers. This year is no exception with shows like "The Umbrella Academy" and "Stranger Things Season 3" coming later in 2019. A movie coming out on Netflix this year that is already generating hype is "Velvet Chainsaw," which reunites actor Jake Gyllenhaal and director Dan Gilroy, who both worked on 2014’s “Nightcrawler.”
Netflix raising its prices is justifiable. Yet, Netflix should lighten the load on the new content it produces and try to work its way back from its debt of $12 million. Periodically raising the price of a subscription for the sake of the company is also recommended.
Jacob Corder is a staff writer.