It's easy to shake your head at Netflix (NASDAQ:NFLX) these days if you're a subscriber. Last month's announcement of a 13% to 18% price hike makes it four times over the past five years that the leading premium streaming service has jacked up its monthly ransoms. Your social media newsfeed probably has blown up this week with friends vowing to kiss Netflix goodbye after the service announced that it won't be renewing The Punisher or Jessica Jones, the last two of its original Marvel series investments.
My fellow Fool, Floridian, and theme-park aficionado Dan Kline offered up three reasons to consider canceling Netflix earlier this month. Maybe you did cut the cord with Netflix. Maybe you're planning to nix the service soon. I would like to offer up the reasons why you're not going anywhere if you're still a subscriber and why you'll probably be back soon if you did move on.
1. Netflix is investing more in you than you are in Netflix
String together the four Netflix price hikes since the springtime of 2014 and you'll see that the platform's most popular monthly plan has gone from $7.99 to $12.99 in that time. Five bucks a month may not seem like a lot, but it's a whopping 63% increase on a percentage basis.
That's a lot of money, but let's take a look at Netflix's side of the bargain. Five years ago, it committed to spend $3 billion on content in 2014. Netflix spent $12 billion on content last year, and analysts believe we're looking at $15 billion in 2019. Your Netflix bill may have gone up 63%, but Netflix's tab has gone up 400%. The scalable nature of its model makes it easy to invest more than what it's collecting from you individually. Perhaps even more important -- the catalog itself expands with every proprietary purchase.
2. You don't want to be left out at the water cooler
Another big advantage of having a huge and growing audience is that you become the ultimate pop-culture tastemaker. No matter what you thought of Bird Box, knowing that more than 45 million accounts streamed the creepy dystopian flick in its first seven days of availability matters. Four weeks in, more than 80 million households had checked out the movie.
You didn't have to watch Bird Box over the holidays if you were a Netflix subscriber, but you didn't have that choice if you were not. Did you enjoy being on the outside looking in at the chatter about the film at work, play, or on social media? If Bird Box had been on Hulu, Prime Video, or any other platform with a smaller audience, do you think we'd even have the Bird Box Challenge and the subsequent outrage? The original Fyre Festival documentary on Hulu didn't gain traction until the one on Netflix become a meme maker.
Check out the latest Netflix earnings call transcript.
3. Content makers go where content consumers are
The final piece of the "good luck leaving Netflix" pie is that studios crave exposure almost as much as they crave money. Netflix offers both. There's no shortage of great content on Hulu, Prime Video, and even the fledgling streaming segments of major networks. However, at the end of the day, you're going to want to get in front of as many people as possible.
Hulu kicking off this year with more than 25 million subscribers is nice, but it's no match for Netflix at nearly 140 million homes worldwide. Rivals will make head-turning content deals every now and then, but Netflix has the means and the audience to be the industry's first choice.
It's so easy to cancel Netflix. A few seconds of clicking around and you're done. Netflix makes it easy to get out because it knows that you're never really going away. It also knows that when you do bow out, the door will always be open for your inevitable return.