What Netflix’s latest price hike could mean for Asia
ON Thursday, video-on-demand giant Netflix Inc raised its monthly fees for the first time in two years, hiking costs for two of its three main subscription plans as it spends heavily on its own original content.
The company’s mid-range plan, which allows streaming on two devices at the same time, was increased to US$10.99 per month from US$9.99.
The top-tier plan, which allows streaming on four screens in high definition, was raised to US$13.99 per month from US$11.99. The basic plan fee remained at US$7.99.
When Netflix raised prices for some customers by as much as US$6 in 2011, 800,000 US subscribers deserted the service. The company made a more gradual move in 2014, which did not provoke the same outrage, but the recent price hike could see it lose out to its rising competitors across Asia.
With the latest price bump, Netflix still reigns as one of the most expensive video-on-demand service providers for pretty much the entire Asian continent.
Malaysia’s Iflix offers RM8 (US$1.90) per month for an annual subscription or RM10 (US$2.30) per month for shorter periods, and Singapore’s Hooq is asking for SGD7.90 per month (US$5.70) or SGD4.90 (US$3.58) per month for a 12-month contract.
Netflix is raising its monthly rates?! Man, whoever's password I'm using has got to be pissed.
— Stephen Colbert (@StephenAtHome) October 6, 2017
On the other hand, Taiwanese-based Catchplay is offering a subscription fee of SGD$14.90 (US$10.90), or SGD$12.90 (US$9.43) for its promotional offer, per month for those who want to watch multiple movies in Singapore.
When Catchplay launched its service in Singapore in August, chief executive officer Daphne Yang said while Netflix is “very strong” in terms of its originally produced content, her platform offered a “stronger” movie lineup and newer titles.
“We are proud of our interface that is specifically created for movie lovers, (so there’s) quite a lot to discover on our service, rather than what you are able to find on rival platforms. Hopefully, that will delight movie lovers,” she said.
In the US, however, Netflix remains cheaper than many of its competitors despite the current price hike. HBO Now, the standalone streaming service of HBO that offers access to shows such as Game of Thrones and Veep, is priced at US$14.99 a month, while Hulu prices its service without commercials at US$11.99 per month.
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“This price increase will likely be a revenue growth catalyst for the company,” RBC Capital Markets analyst Mark Mahaney wrote in a client note. “The content, not price, is the leading churn/churn-back factor amongst Netflix subs.”
The price hikes will only be in the US and will start taking effect from mid-November, depending on users’ billing cycles. The higher pricing comes as the video streaming service spends heavily on original content and expanding outside the US
Netflix had earlier said it would spend over US$6 billion this year on original shows and expected to have negative free cash flow of US$2 billion to US$2.5 billion.
“The average revenue per user (ARPU) lift is a significant growth driver and important to … (the) content budget,” Sanderson said.
Additional reporting by Reuters