Why Netflix needs to be careful about raising subscription prices

As subscription services raise their prices in an effort to keep up with profligate content spending, a new poll warns that they should be careful. Netflix, which recently hiked its tiered-subscription fees to $9, $13, and $16 a month, is now at the high end of what Americans are willing to pay for a streaming service that delivers unlimited TV shows and movies. 

According to a Hollywood Reporter/Morning Consult survey, the “acceptable range” for such a service is between $10 and $16 a month. The poll surveyed 2,200 adults between January 17 and 19. 

Hulu also recently announced a price increase for its live TV package from $39 to $44.99, though it’s dropping the price of its ad-supported TV show and movie service to $5.99 down from $7.99. The latter shift makes it cheaper than what Americans are willing to pay for an ad-supported service: between $8 and $12 a month. 

The new poll did not include stats on what people feel comfortable paying for a service that includes live TV. But it found that the acceptable range for a service with only unlimited TV shows is between $8 and $12 a month. For services with only unlimited movies, the range is between $8 and $13 a month. 

Netflix’s price hike was the biggest in its history and comes as the streaming giant is expected to shell out a reported $15 billion on content this year. As that content budget escalates annually, as it historically has, and as CEO Reed Hastings has said it will at least in the near future, the question is, How long will it be until another price hike is necessary to keep up with spending? And will there be a point when Netflix prices itself out of the mass market?

At this point that seems unlikely. With 139 million global subscribers, Netflix has a supreme first-mover advantage and is among the core services that Americans sign up for, followed by Amazon and Hulu. But with new OTT offerings coming soon from Disney, WarnerMedia, and Comcast, Netflix will need to keep an eye on its pricing. With more choices at cheaper rates–Disney+ is expected to debut at $7 a month–the company could lose its grip on the market.