Entertainment Tech News

It Turns Out Netflix Was Right to Raise Prices

Dave Parrack 17-10-2016

Over the last three months, Netflix has added millions of subscribers, and earned billions of dollars in revenue. This strongly suggests that its decision to raise prices for existing subscribers hasn’t harmed the company in the slightest.


Netflix has revealed its financials for Q3 2016 [No Longer Available]. They show that Netflix gained 3.6 million new subscribers and took in $2.2 billion in revenues during that time period. Unsurprisingly, given how positive these results were, Netflix’s stock has shot up by 20 percent in after-hours trading.

In terms of subscriber numbers, those 3.6 million mostly came from new markets. In January 2016, Netflix expanded into 130 new countries Netflix Expands Everywhere, Oculus Pricing Causes Rift... [Tech News Digest] Netflix is now available in almost every country, the Oculus Rift will cost you $599, Politwoops embarrasses backtracking politicians, Psychonauts 2 is getting made, and Trevor from GTA V is now selling Old Spice. Read More . And it’s adding millions of subscribers in these new territories. However, of the 3.6 million new subscribers, just 370,000 were in the US.

This shows that the price rise which hit grandfathered accounts Netflix Suffers Price Rise Shock, Microsoft Confirms Xbox S Release... [Tech News Digest] Netflix suffers due to recent price rise, Microsoft teases the new Xbox S, Netflix nabs the new series of Star Trek, become a Jedi using your Vive, and watch a live-action version of Futurama. Read More earlier this year made very little difference to the overall number of people subscribing to Netflix. However, it also suggests Netflix has peaked in its country of origin, with US growth tapering off to nothing.

In terms of revenues, the $2.2 billion Netflix made in the last quarter is a record best for the company. And that shows the true power of price rises. Even if subscriber numbers stay level, Netflix will be making more money. At least all the while existing subscribers are happy to pay more for Netflix Why You Should Be Happy to Pay More for Netflix Every time Netflix increases its prices, millions of binge-watching users balk at the prospect of paying a couple of dollars more. But this is dumb, because Netflix is an absolute steal. Read More .

What Does the Future Hold for Netflix?

So Netflix had a good quarter, and the rising share price is testament to that. However, as is usual with financial reports, Netflix also focused one eye on the future. On that front, there are two things worth noting.


The first is Netflix’s plan to produce more original content. We recently discovered Netflix has removed half its catalog to fund more original content Netflix Removes 50% of its Catalog to Fund Original Content Have you noticed the Netflix catalog getting smaller in recent years? We now know the number of titles available on Netflix has been halved since 2012 to fund original content. Read More . We now know that Netflix plans to almost double the amount of original content it produces, from 600 hours this year to 1,000 hours next year. So if the likes of Stranger Things, Narcos, and Luke Cage hold no interest for you, you’re out of luck.

The second is Netflix’s continuing mission to launch in China. Netflix stated that as “the regulatory environment for foreign digital content services in China has become challenging [the company now plans to] license content to existing online service providers in China rather than operate our own service in China in the near term.” So, sorry, anyone reading this in China, but Netflix isn’t launching in your country anytime soon.

What do you think of Netflix as it exists today? Do you think the company is heading in the right direction? Or is the outward expansion and/or investment in original content damaging the brand? Please let us know in the comments below!

Image Credit: Jenny Cestnik via Flickr

Related topics: Media Streaming, Netflix.

Affiliate Disclosure: By buying the products we recommend, you help keep the site alive. Read more.

Whatsapp Pinterest

Leave a Reply

Your email address will not be published. Required fields are marked *

  1. Danny Waggoner
    July 25, 2017 at 1:52 pm

    Personally, I don't care for Netflix originals except for House of Cards. Resurrecting Happy Gilmore type movies is a disaster for me. I want movies, movies and more movies. Movies from the 70's, 80's, 90's and 00's. Plus new movies when they are available. Losing Starz almost made me leave Netflix. I picked up Starz on Amazon, but it's an additional charge. 80% of the time when I go to look for a movie, it's only on DVD, or not even available at all. If Netflix hikes it's price one more time without adding hundreds of great movies, I will be gone. FandangoNow has a great selection, and addon channels from Amazon replace what Netflix lost. I now keep track of how many movies I look for are NOT on Netflix, and if it gets any worse, I am gone. I was one of the first streaming subscribers, I suspect I won't be the last if they keep losing good movies in favor of in house garbage.

  2. Ellen
    May 13, 2017 at 1:45 pm

    I hope that Netflix keeps the best of both worlds. I watch a lot of the movies and am able to see the ones that I missed when they hit the big screen. However I also love the original TV programs and am looking forward to some that are coming soon as well as watching old favorites where I missed episodes before there was DVR. I know we had VCR but, when I was working 50 hours a week, I could only record 6 hours of my faves.

    Moving beyond the 'just movies' box was a great idea. I used to be a disc in the mail subscriber but went to full streaming a couple years ago. We have also dropped all but the basic cable in favor of streaming services. However, I love being able to watch movies and would probably drop the service if it becomes all original programming.

  3. George
    January 31, 2017 at 11:24 pm

    It sounds like the MTV model. Had an original idea and was hugely successful. A lot of people liked it. Then they switched away from music videos and went with shows. Now all they have are shows. Vh1 came in and took the mantle for a while with showing mostly videos, then they changed. The same type of thing will happen to Netflix. They will drop most if not all of their leased content and go full original. They will still be successful but another company will come in and do what they used to do from the start. That's when I will drop Netflix. I abhor most television shows but love movies so once they are gone from Netflix I will move on to whoever has what they used to offer.

    • Danny Waggoner
      July 25, 2017 at 1:54 pm

      I hate TV too. Most of Netflix inhouse productions look like tv. Any further cut in movie selections, and I am gone! You are so correct, you can always tell when the stock market takes over a company, prices go up, and quality goes down.

  4. Howard A Pearce
    October 19, 2016 at 2:32 pm

    It's important to point out that just because Netflix has continued to do well is not actually proof that any particular decision Netflix made was not "harmful" as ALL actions impose only a NET change on the company.

    An action can harm the company by $100 but other things going on can benefit the company by $1,000 - producing a net benefit

    This is important to remember when politicians point to how well the economy is doing as proof that their actions are not harmful.

  5. likefunbutnot
    October 19, 2016 at 2:27 pm

    I use Netflix almost exclusively to get discs by mail. Still. I'm very happy to do that, even though that part of the service has been de-emphasized in favor of streaming. The only things I stream are the original programs. Since I already have a significant library of locally stored video, the Netflix Productions are the only content I find truly novel anyway; I'd rather it focus its attention there than add more of the same blockbuster titles I already saw in the theater or have access to through other streaming services.

    Netflix Productions are also some of the only widely available 4k content. Since I have an HDR 4k TV, I'm grateful that shows like Daredevil and House of Cards can actually make full use of my hardware.

  6. Oswaldo
    October 18, 2016 at 11:32 pm

    I had already subscribed to Netflix a few years ago, but it didn't hold my interest past the free trial month. I've always preferred physical media for movies. The Star Wars catalog wouldn't have called my attention (I already have them in Blu-Ray). Original content is what made the subscription worthwhile. I'm currently enjoying Daredevil (no, I don't mean the 2003 movie with Ben Affleck) and I'm planning on catching up with more superhero TV series. Also, I like the new kids-friendly shows like "Beat Bugs".

  7. Frank Bales
    October 18, 2016 at 1:55 pm

    I'm constantly amazed at how so many companies do not heed the great old adage, "if it ain't broke, don't fix it." You do expect products/services to improve, but to completely change from what made you successful just seems moronic. I'm disappointed in Netflix move to more original content. Simply don't like most of it (Longmire being he exception, which is not original content). I'd rather have more and newer movies, or even more great classic movies. I'll keep my subscription for Longmire, but when this show is gone I probably will be too.

    • Josh
      October 18, 2016 at 2:27 pm

      Who says it isn't broke? Maybe it's not for you, but for Netflix it very well might be. Now that Netflix is such a success movie and TV studios are realizing they can start their own streaming service or start charging Netflix more and more money for the same shows and movies. Ever increasing licensing fees would be a broken business model for Netflix. Creating their own content is a much more effective way of controlling costs compared to the whims of various studios. And while Netflix has some room to raise prices to make up for this, there is only so much they can charge before people do start to walk away from the service.

      • Frank Bales
        October 19, 2016 at 5:54 pm

        Well, exactly. For me it is. It was MY opinion after all.

      • Vince
        October 20, 2016 at 1:38 am

        As of right now I can't help but agree with Josh that original content by Netflix is the way to go. Especially with the fact that licensing fees for content that isn't their's can rise and cause membership fees to rise. Let's however fast forward now 10 - 20 years down the road (or however long it may take) and Netflix has manage to build a huge lists of original programming, so much that they can either one, decide they have a huge enough library of shows that they don't need to pay a licensing fee to anyone for there older programming and just drop there shows altogether or two and more importantly, having your own content can help in controlling cost but who is to say they can't start charging a premium price for their original content? Which may very well be the case if they still control the streaming market in another 10 years.

      • Danny Waggoner
        July 25, 2017 at 1:56 pm

        controlling cost by cutting the number of catalog movied and increasing their own crappy content for the most part is just not a smart business model for the long run.