Netflix (NASDAQ: NFLX) has announced that they'll be raising their prices this year, again. In what seems to be a trend, the streaming service decided to raise their standard plant by $1 per month, and their premium plan by $2 a month. Their choice to raise their prices regularly is why Netflix has a market valuation of $218 billion, with only $2.8 billion net income in the last 12 months.
The last price increase from Netflix was in January 2019. This new raise in prices will take the standard plan from $12.99 to $13.99, and their premium plan from $15.99 to $17.99. While the popular streaming service has been able to avoid large pice hikes thanks to its constant stream of new subscribers, Wall Street also counts on consistent price increases as their stream of new subscribers slowly starts to dwindle. Eventually, investors hope Netflix will be a staple in every persons home like cable TV, but with the market dominated, the only way up is by increasing prices.
Many think Netflix is on the right track for their goal. While the monthly churn for Netflix is far below other streaming serviced like CBS All Access (which is changing its name to Paramount+) and Starz, Netflix has an incredible $17 billion budget to put towards offering everything from animated children's shows, rom coms, reality and documentary shows, cooking and food programs, and entertainment series ranging from drama to supernatural. Other streaming services just can't keep up with the sheer diversity of Netflix's entertainment.
But the breadth of their content isn't their only winning tactic. They way that they introduce price hikes is their other main winning component. Without significant price spikes, they avoid consumers canceling or customer dissatisfaction. On top of that, they're still one of the most affordably priced streaming serviced. The average cable bill is around $100 a month, while YouTube TV (NASDAQ: GOOGL) is &64.99, AT&T Now (NYSE: T) ranges from $55 to $80 a month, and Sling TV (NASDAQ: DISH) slides in at $30 a month. Compared to Netflix's premium priced service at $17.99, it's no surprise they keep pulling in customers.