Netflix (NFLX -0.95%) has seen a massive increase in competition for consumer's couch time over the last couple of years. Media giants like Walt Disney (DIS -2.68%) have invested billions in direct-to-consumer streaming services new and old, while longtime-rival Amazon (AMZN -1.54%) also made a step-up in its streaming-content investment in 2020. 

At the same time, Netflix's management hasn't been afraid to keep raising its prices. It raised the price of its most popular plan by $1 earlier this year, and most U.S. subscribers now pay about $14 per month. But based on viewer behavior, there's still room for Netflix to increase prices.

A family watching TV in their living room.

Image source: Netflix.

Nielsen's new measurements

Last week, the television-ratings company Nielsen released its first report on video-streaming engagement called The Gauge. The results show Netflix accounts for 6% of all TV viewership among Americans across streaming, broadcast TV, and cable. 

Here's how the main competitors stack up.


Share of TV Viewership

U.S. Subscribers

Price Per Month



67 million*




41.6 million


Amazon Prime


60 million*




41 million*


Data source: Nielsen, Netflix, Disney, Amazon, CIRP. Table source: Author. *Author estimate.

Americans stream twice as much Netflix as the next closest SVOD service, Hulu. Granted, Netflix has more subscribers and costs more per month than Hulu, but even when you take those factors into account, Netflix provides outsized value.

Netflix costs about 16.7% more per month and has 61% more subscribers. If it provided equal value to Hulu, investors should expect streaming hours to be about 87.9% higher. However, consumers are streaming 100% more Netflix than Hulu. Based on that number, there's room for Netflix to increase its price by nearly another $1 per month.

The difference in value -- based on engagement per total subscription dollars -- is even bigger between Netflix and Amazon and Netflix and Disney+.

Beating cable TV

Americans still love cable TV. Approximately 39% of all TV time is with cable TV, according to Nielsen, despite rapid increases in cord-cutting. There are only about 82.8 million pay-TV households left in the U.S. after another 1.5 million cut the cord in the first quarter. Their average bill is around $100 per month.

Even with cable subscribers watching hours of TV every day, it doesn't provide the same value as Netflix. At $100 per month and about 82.8 million subscribers, cable needs to provide about 8.8 times the engagement as Netflix, and it's only at 6.5 times.

What's more, the trend of cord-cutting is only growing. As more subscribers cut the cord and rely solely on streaming services, their engagement with cable TV will clearly decline, and engagement with Netflix (which many cable subscribers already pay for) will likely increase.

Indeed, Nielsen expects streaming to grow from 26% of all TV time to 33% by the end of the year, and it won't be long before streaming overtakes cable TV.

How much is a price hike worth to Netflix?

If Netflix raises its pricing in the U.S. next year by $1 per month, it'll generate an additional $800 million in revenue just from its U.S. subscribers. Netflix doesn't usually raise prices in a single geography, and price increases in the U.S. are historically preceded by increases in Canada. The northern neighbors could add another $100 million or so in annual revenue.

Importantly, Netflix is theoretically providing enough value today to make that price hike. So it could keep its operating expenses and content investments stable, while still justifying the price hike. In other words, it could add nearly $900 million to its annual operating income with a $1 per-month increase in price across the U.S. and Canada. Of course, Netflix is content to keep increasing its content and marketing budgets.

That represents nearly 20% of 2020 operating income and about a 15% increase from 2021 estimates. And that's just from raising the price by $1 in the U.S. and Canada, not adding new subscribers, and not considering operations in other regions. There's still a lot of operating leverage left in Netflix.