Netflix's price increase might cause it to lose millions of subscribers, survey says

Netflix's price increase might cause it to lose millions of subscribers, survey says
Netflix has become a household name in the States and its streaming services are used by millions of people every month. The company recently announced an increase in price for all subscription plans and while it may have thought people won’t mind paying a couple more bucks a month, a lot of its customers are not on the same page.

The information comes from Multichannel’s report on research done by The Diffusion Group on Netflix subscribers sensitivity to price increases. We don’t know if TDG had any inside information on the upcoming changes or was just lucky to have conducted a survey before they were announced, but either way, the results are worth examining.

The participants in the research were 1,940 US adults and they were asked what their reaction would be if Netflix increased prices by $1, $3 and $5/month. As a reminder, Netflix is bumping its cheapest subscription from $7 to $8/month (14% increase) and its more premium plans by $2/month from $11 to $13 (18% increase) and $14 to $16 (14% increase). So while the survey didn’t match the second increase bracket, the results can still be useful. Here’s what people said.

When it comes to the $1 increase, 8% of the people said that will be the last straw for them and they will cancel the subscription altogether, while another 8% said they’ll downgrade to a lower plan (but what if there isn’t one?). For the $3 increase, those percentages are 16% and 22% respectively, so by doing some rough interpolation, we can assume that for a $2 price increase about 12% would cancel the service.

Those are not small percentages at all, if we apply even the lowest 8% to Netflix’s user base in the States, around 58 million strong, that would be equal to a 4.6 million drop in subscribers. Let’s go on with the math for just a bit more. If every one of those lost subscribers was on the cheapest plan, that means Netflix will lose about $37 million per month in revenue. However, the remaining 53+ million subscribers will bring at least a dollar a month more, meaning the total monthly revenue will actually go up by around $15 million.

Again, those are very rough calculations that are just meant to show you that Netflix knows what it’s doing. The stock market seems to agree as well, Netflix shares getting their own price bump after the company’s announcement. What the actual change in subscribers will be we may find out in a few months from now when things settle down.

How do you feel about the price hike, will you cancel, downgrade or just start paying more?



1. notfair

Posts: 776; Member since: Jan 30, 2017

never ending rising prices yet the salaries stays the same or even lower. f**k the shareholders.

2. maherk

Posts: 7057; Member since: Feb 10, 2012

I doubt 2 dollars will have such an effect. It's a survey, of course people will vote against this increase. They'll also gain millions of new subscribers when they implement the new software that detects shared accounts, tens of millions will now be forced to get their own accounts and I'm sure a huge portion of them will end up doing so.

6. dimas

Posts: 3446; Member since: Jul 22, 2014

It's a cheap increase for me.

7. maherk

Posts: 7057; Member since: Feb 10, 2012

Same here. For the content you get, it's worth every penny. Netflix just paid 100 million dollars to keep Friends for another year just to please their costumers. People expect them to pay billions of dollars on new and exclusive shows, yet they want to pay the same fees they did 4 years ago.

3. surethom

Posts: 1748; Member since: Mar 04, 2009

Should have just increases by 1 or 2% a slower increase would not affect there subscribers as much. But I guess the launch of Disney on-demand they need more money to invest.

4. AceNJ

Posts: 26; Member since: Sep 29, 2015

there isn't much competition. prime just isn't as good so will likely just suck it up for now.

5. dimas

Posts: 3446; Member since: Jul 22, 2014

I don't get these people. In my country, cable subscription is $25/month and you won't even watch all channels. With netflix, you can watch everything, even binge on your own time sched 'til you die.

8. JCASS889 unregistered

If your android, just download showbox.

9. L0n3n1nja

Posts: 1603; Member since: Jul 12, 2016

Cancel Netflix over a $1/month and do what? Go back to spending almost $100/month for cable? Some people are silly.

10. phoneclash

Posts: 40; Member since: Dec 18, 2018

I’m just going to pay the dollar a month more, I don’t share my stream it’s just me.

11. stephcarlofc

Posts: 4; Member since: Dec 11, 2018

I'd still rather pay $16 for Netflix than $300+ dollars for Cable TV in which there some cable channels I will never watch!!


Posts: 655; Member since: Jun 28, 2014

I just cancelled my Netflix account, and not because of the price hike. It is because I discovered Tubi TV. Not only is it free, but it has way more great stand-up comedy and African American content than Netflix or any of the other subscriber services, not to mention many newer movies and even some exclusive content. The app is also available on the Fire TV app store which is a plus for novice Android users (no side-loading is necessary). There are ads, but not nearly as much as the hell hole that is Hulu - and did I mention IT IS 100% FREE.

13. JCASS889 unregistered

you should check out showbox

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