Netflix Prices Rise: 3 Ways It Can Keep Customers on Board
After warning customers it was coming, Netflix (NASDAQ:NFLX) has announced it will be raising prices on its streaming media service by $1 for new customers. The new price is now set at $8.99 for incoming customers, a price that is still completely reasonable considering the wide range of options available on the Netflix platform. The company is approaching the price increase delicately, as consumers didn’t take kindly to past price increases or announcements regarding product changes. The new $1 price bump shouldn’t be followed with the same backlash, but as many have witnessed, comes most likely in response to turbulent and uncertain times for tech companies.
First, competition for on-demand streaming services is ramping up, with rivals like Amazon (NASDAQ:AMZN) reinvigorating its Amazon Prime service to include a smattering of HBO programs, original content, and more. Amazon might present the biggest and most resourceful challenger on the slate, but Hulu Plus is still around, adding its own original content and fresh shows from broadcast and cable networks. Apple’s (NASDAQ:AAPL) Itunes offers viewing options as well, although on a more à la carte basis. Even Google (NASDAQ:GOOG) looks primed to enter the fray, with viewing options already available through its Play store. While competitors are turning the industry into an arms-race of sorts, Netflix has needed to add to its own arsenal, signing expensive content deals to keep fresh selections available for viewers.
Secondly, Netflix has been under pressure by consumers for the quality of its streaming service, and finally had to succumb to mounting pressure and cut a deal with Comcast (NASDAQ:CMCSA) to keep its content moving at an acceptable pace. The ongoing turmoil over net neutrality rules further complicates things, as does Comcast’s pending merger with fellow internet service provider Time Warner Cable (NYSE:TWC). Depending on which way the FCC decides to rule on net neutrality, Netflix may have to pour more resources into making sure its content reaches customers.
Netflix is truly under fire from several directions, and yet the way the company has decided to move forward has been admirable. Rather than dumping a huge price jump on its customers (which didn’t work out so well last time), Netflix opted to have a public discussion about it, getting feedback from its users while simultaneously laying out the logic behind its decision. Few companies have done as much as Netflix to push the envelope in its respective industry, and if it can keep the respect of their customers, there’s no reason to think it will be dragged asunder by the threats of its challengers.
No company is completely invulnerable, however. For Netflix to truly plow its way into the future unscathed, certain measures must be taken. Here are three ways they can keep customers on board and continue to see growth going into the future.
1. Continue Adding Fresh, Noteworthy Content
With the smashing success of the Netflix original series House of Cards and the resurrection of the critically acclaimed Arrested Development, Netflix found a way to tap into an entire new customer base. House of Cards cleaned up at the Emmy’s, giving exposure to the level of quality that Netflix can produce with its original creations. It has since gone on to add other fan favorites, like Orange Is the New Black and even feature-length films like The Square. Much like HBO, Netflix is not bound by the rules of broadcast, and can create programs aimed at niche audiences, giving it an opportunity to reach viewers others may not be.
Netflix has long been the home for several classic series that viewers love, like NBC’s The Office and AMC’s Breaking Bad. The platform has been home to blockbusters like Braveheart and Titanic as well, although titles do rotate in and out of availability. But it’s the revolving door that keeps customers logging in. As long as Netflix can keep securing contracts to keep high-quality television series and movies on its platform, customers will keep coming back. If it keeps reinvesting its profits into top-notch programming like House of Cards, it could be not only be king of the streaming services, but hot on the heels of the best content creators around.
2. Show Customers The Company Is on Their Side
Having learned from past mistakes, Netflix made the wise decision to be open about raising its prices and where it plans to head into the future with the public. As many customers probably appreciate the heads up, most are probably willing to forgive a small bump, which existing customers are grandfathered-in under. An open dialogue with the public about where it is taking the service is not only in the best interest of the company, but the industry as a whole. If users log on one day to see a great deal of content is no longer available without warning, a mass exodus could easily occur to one of the company’s rivals.
Netflix is also putting its money where its mouth is by fighting for widely publicly supported issues like that of net neutrality. It has also been vocal opponents of Comcast’s merger with Time Warner Cable, which has been widely speculated to be a terrible development for consumers. If things do not play out in Netflix’s favor, it will most likely need to pony up the cash to ISPs to keep its service streaming at acceptable levels, most likely leading to increased costs for users.
By being on the forefront of social and tech issues like net neutrality, it shows the public the company is willing to step up when needed to lessen the burden on customer’s wallets. A show of respect to your customers isn’t exactly common in today’s business climate, but if Netflix continues to show itself as a champion of the people, it will pay off in the form of customer loyalty.
3. Keep Innovating and Pushing Boundaries
As one of the chief innovators in the entertainment industry, Netflix needs to keep on doing just that: innovating. When the company first rolled out its online streaming technology, things really took off, and it added customers left and right. It then expanded onto multiple platforms, like video game consoles, tablets, and smartphones.
With the release of a new logo, it looks like the idea of evolving hasn’t left the mind of Netflix executives. There are also other new developments in the works, such as the possibility of Netflix actually making the jump to cable television, further opening its exposure to customers who may not be familiar with its original programming.
There’s really no telling what else the company has up its sleeve, or where the leadership plans to take it next. If it can keep changing the game the way it has over the past decade, Netflix should be in no danger of hemorrhaging users, and would more than likely attract many more.