Does Netflix Need to Raise Prices in the Future?

Even though the Qwikster incident is still fresh in the minds of investors and consumers, talk about whether Netflix (NASDAQ: NFLX  ) will need to raise prices in the future to cover the rising cost of content has been buzzing around Wall Street. In the following video, Fool contributor Matt Thalman looks at how the company's revenue has increased as a result of subscriber growth over the past year. After examining the numbers, Matt offers two reasons he thinks Netflix neither needs to nor should increase its monthly subscription rate anytime soon.

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  • Report this Comment On August 18, 2013, at 5:56 PM, Speedracer69 wrote:

    Absolutely not! If they go up in prices I will drop them like a bad habit..

  • Report this Comment On August 18, 2013, at 7:00 PM, AceInMySleeve wrote:

    They don't strictly *need* to because they can continue to improve the service and grow rapidly at 8$. When they've saturated the US market they will raise prices because the majority of the subscriber base will pay. At 50M subscribers, every dollar is 600M$ a year. If they put 65% of that into content, the return to customers and to the bottom line is dramatic.

    Customer surveys that ask about response to price increases are meaningless. People don't have accurate models of themselves. The value of Netflix is unparalleled.

  • Report this Comment On August 18, 2013, at 9:53 PM, sliderw wrote:

    @AceInMySleeve re: "People don't have accurate models of themselves."

    This is a great line! (Regardless of whether I agree with your main points or not.)

  • Report this Comment On August 18, 2013, at 10:07 PM, akguy2013 wrote:

    It cracked me up how much people cried about the price increase. I have three teenagers, we were giving blockbuster $40 in late fees every month. Netflix is still a great deal.

  • Report this Comment On August 19, 2013, at 8:13 AM, MFMotleyStool wrote:

    "Easily double households in the next 5 years with 114M households and 30M under their belt." How could anybody take this FOOL seriously. Yes, over 50% of US households will easily subscribe to NFLX. Please, stop the video right there and realize this guy is a wet behind the ears pumper trying to sell you the Brooklyn Bridge or simply does not understand math.


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