In order to fund the creation of new content, Netflix is raising the prices of their streaming service. The premium plan and standard plan will now cost $13.99 and $10.99, respectively. This change arrives when the market for streaming services is becoming increasingly more competitive. Hulu, Apple, and Amazon are now all pursuing a similar model; online streaming with exclusive movies and shows. With all this competition, Netflix's decision to raise the prices may at first seem counterintuitive.
However with close examination of Netflix's target market, their new marketing strategy looks promising for the company. Netflix's customers definitely do not want to overpay for their content, however many subscribers are content with the price as long as it remains cheaper then cable. Also Netflix's customers already pay to watch content that is available for free on torrent sites such as kat.tv and fmovies.se. This shows that cheap prices are not the only characteristic they seek in a streaming service. Finally Netflix's exclusive shows and movies are already one of the main reasons why Netflix is popular. Investing more money into the production of exclusive media is a wise marketing decision, even if it requires the price of the service to rise. Overall it seems that Netflix is making the right decision because it is unlikely that their increased prices will decrease their user base significantly, but it will allow them to improve and increase the production of Netflix exclusives.
https://www.wsj.com/articles/netflix-raising-u-s-prices-1507212496
Netflix's decision to raise its monthly subscription rates is a good strategy for the future of the company. As streaming services are becoming more popular, the need for this type of companies to create their own movies and TV shows is increasing. Therefore, streaming companies need to find ways to earn money that goes towards the development of materials exclusively to each company. The fact that Netflix has increased its membership fees, suggests that the extra revenue they are earning goes toward the production of material exclusively to Netflix.
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