Every time Netflix increases its prices, millions of binge-watching users balk at the prospect of paying a couple of dollars more. But after you consider what Netflix is offering, and where it could be headed, you should quit complaining. Why, because Netflix is an absolute steal.
Back in 2011 Reed Hastings, CEO of Netflix, was forced to apologize after he surprised users with an unexpected price hike. Netflix’s stock plummeted 19 percent. Then, as we reported in January 2015:
“In May 2014, Netflix announced it was raising its prices from $7.99-per-month to $8.99-per-month. In October 2015, Netflix raised prices once again, from $8.99-per-month to $9.99-per month.”
Each of these price hikes saw users up in arms, accusing Netflix of hypocrisy, penny-pinching, and taking advantage of their nigh-monopolistic position. The audacity of asking users for the cost of just half a Starbucks latte left millions reeling. In return for what?, they cried. Unlimited streaming of some of the greatest classic and original content ever produced, that’s what.
The tightfisted attitude of users left my jaw agape. The average U.S. household spends $2,500 per year on entertainment, $1,700 on clothing, and $580 on personal care. When the cost of movie tickets or moisturizer crawls up another dollar or so, barely an eyelid is batted. But when Netflix wants an extra $12 – $24 per year (that’s $0.03 – $0.06 per day!) for their ever-improving nightly entertainment, customers recoil in disgust. Let me explain why that’s crazy.
1. It’s Still a Bargain
Netflix’ customers demand an ever-expanding library. As that library continues to increase in size, the cost to maintain and add to it understandably increases too. That cash has to come from somewhere.
Even at $120 (as of 2016) per year, Netflix is a bargain. Ultimately, the growing all-you-can-watch buffet Netflix offers arguably surpasses all of its competitors in both quantity or quality. The only possible exception here is Amazon Prime Video. For the lower fee of $99 per year, you have access to a slightly larger (though less wide-ranging) library, alongside a host of other benefits.
As we’ll see later though, there are other reasons for not abandoning Netflix in favor of Amazon over a trifling few dollars. In any case, if Amazon upped its prices slightly too, I would personally still argue the case that it’s still worth keeping your subscription to both.
That being said, Netflix is (at the time of writing) still cheaper than the $12 Hulu charges for its much smaller, commercial-free library. If you want to stream the limited (but impressive) titles of HBO — Game of Thrones, The Sopranos, The Wire, etc.— it’ll cost you $15 per month.
Meanwhile, the pay-by-the-title offerings from iTunes and Google Play would, show-for-show, cost you a small fortune.
2. No, It Really Is a Bargain
In Netflix’ quarterly letter to shareholders, released in January 2016, the company claimed that its members streamed 42.5 billion hours of programming in 2015. In 2014 that figure was 29 billion hours. This means the average user watched 93 minutes of content per day on Netflix in 2015.
- At $8 per month, that’s $0.17 per hour
- At $10 per month, that’s $0.21 per hour
- At $12 per month, that’s $0.25 per hour
- At $14 per month, that’s $0.29 per hour
Over time, average consumption on Netflix is increasing. This means the cost-per-hour of consumption is going down. In other words, the more time you’ve been spending on Netflix, the less you’ve been paying per-hour.
So when you’re watching a brand new 10-part series produced by Netflix at much less than $0.30 per hour, compare this to the (at least) $4 per hour you spend on a movie ticket.
3. Quality Content Comes at a Price
Aside from its extremely affordable price, Netflix has mastered the recipe for creating must-watch television series. These TV series are not only incredibly high quality (receiving 34 Emmy nominations in 2015), but you can watch an entire series in one sitting, the day it’s released, on virtually any device.
Look at the buzz around shows like House of Cards, Orange is The New Black, and Marco Polo. Shows of this quality do not come cheap. Their respective budgets (according to IMDb) are $4.6 million, $3.8 million, and $10 million per episode, respectively.
This standard of creative production simply has to by worth paying for. For less than the cost of a couple of movie tickets per month, you can have access to the entire Netflix library. You’re able to watch all of the Netflix Originals due to come out during 2016. For just a few cents per hour, you can watch many of the most exciting shows being produced today. Hell, you can even watch some of the worst movies of all time.
As Marta Kauffman, the co-creator of Friends, told Indiewire:
“The truth is, it’s wonderful, because there’s only one thing we’re doing. We’re not pandering to advertisers: we’re not pandering to a network. All we’re doing is making the show we want and that we believe in.”
When Amazon attempted to follow suit by releasing The Man in The High Castle, the results were very good, but not on the same level that Netflix has achieved. If you’re going to pay a subscription to just one streaming service, at least choose the service with the best reputation for producing stunning show after stunning show.
4. This Is a New Era of Creative Freedom
By far the most exciting prospect of Netflix having more cash in its back pocket is the potential for a new era of TV.
Each segment of Netflix’ millions of viewers enjoys different content. Until recently, most of these niches have been ignored on almost all networks. The viewer numbers just aren’t high enough to justify production costs.
However, Netflix has the resources, algorithms, and know-how required to create very creative forms of television that no one else has the courage to fund. In backing Making a Murderer, Netflix dipped its toe into these experimental waters. The results have been extraordinary, with some saying that this one series may have created an entire new genre of film.
With its enviable track record, if we had to entrust one streaming service to undertake the task of reinvigorating creativity and experimentation in the TV industry, there would be no surer bet than Netflix.
With even more cash available the doors could be opened to more creative and technical freedom. In Hollywood, producers, actors, and directors will likely soon use Netflix as their distribution platform of choice. After all, it may be the only platform that can both fund and distribute their programs to the right audiences.
If, for an extra $2 per month, we can contribute to this new age of experimental TV, I for one am all for it.
So, Are You Happy to Pay?
By comparing the price of Netflix to its competitors, the quality of its productions, its ability to produce ever-more creative shows, and the cost-per-hour of streaming, we have surely demonstrated that a few extra dollars don’t really matter.
And if those few dollars really do matter to you, a couple of these money-saving tips should help you to continue paying that “extortionate” Netflix subscription. Whether all of this convinces you or not, I certainly won’t be crying into my milk over Netflix’ tiny price hikes.
Will you be staying with Netflix after it increases its prices? If so, what’s the best thing Netflix could do with its increased revenues? Please let us know your thoughts in the comments below.