We all knew it couldn’t last; $8 for an all-you-can-stream buffet just was too good for this sinful world. And yes, Netflix will be raising prices by $1 to $2 relatively soon. But why?
1. It Was This Or Less Content.
Netflix has to pay for the content it streams, just like any other service. Hulu makes it up with ads, Amazon makes it up with getting you to buy TV shows through them, and Netflix… well, Netflix doesn’t do anything besides charge you money, actually. And as content prices go up, Netflix either has to raise prices a bit to pay for it… or offer less service.
2. Their Great Original Shows Aren’t Cheap.
House of Cards, Orange Is The New Black, and other Netflix exclusives aren’t exactly cheap. House of Cards alone cost $100 million just for the first season, and those bills are largely paid by Netflix. So if you want more of those shows, well, it is going to cost you a little more money.
3. It’ll Let Them Create Price Tiers.
One rather telling bit from the announcement was the fact that Reed Hastings, CEO, noted that they wanted to ease customers into paying a bit more for the service. And, more importantly, the price range allows Netflix to create price tiers. Some of us stream video constantly, as the dreaded cord-cutters cable has been pretending no longer exist, and yet still fear anyway. And we’ll need a “deluxe” plan. Others, however, might only use it when they’re stuck at their parent’s house over a long weekend, or to amuse their kids, so they might want a more limited, cheaper streaming plan.
4. It Gives Netflix The Flexibility To Not Do This All At Once.
If you’re already a loyal Netflix subscriber, you won’t be paying the new prices quite yet. Netflix has noted that current users will get a generous time period where they’ll still be paying the old price, and can decide whether or not they want to continue their service at the new price. Which realistically is $12 to $24 extra a year, and considering all the content the service has, is kind of a steal in of itself.
5. It’s Still Going To Be Vastly Cheaper Than Cable.
Finally, there’s this simple reality: Even if Netflix doubled its prices, it’d still be cheaper, and better, than cable. Cable bills, over the last decade, have doubled to $78 on average, and they’re just going to keep going up. In fact, the cable industry sees that continuing: By 2020, they fully expect you to be paying an average of $200 a month for cable.
Yeah, a lot of people are going to whine about the Netflix price increase, and hey, that’s valid. Nobody enjoys paying more, even a little bit more, for a service they’re enjoying. But considering what Netflix offers, and how it means instead of watching canned reruns, you can pick the shows you want to watch yourself, Netflix at twice the price is still going to be a steal. Besides, what else are you going to do at your parents’?
Dan Seitz is an obsessive nerd living in New England. He lives in the Boston area with a fiancee, a dog, a cat, and far too many objects with processors.