When it comes to streaming services, Netflix still far outpaces the competition. Its 98 million worldwide subscribers dwarfs that of Hulu (12 million), Amazon Prime Video (~21 million) and HBO Now (2 million domestic). Throw in the increased emphasis on cord-cutting and Netflix’s growing library of original content and it’s easy to see how the streaming service can continue its reign on top for the foreseeable future. But now that Netflix has settled in comfortably to its dominant position, the company may begin to test just how much you really want to see the new seasons of, say, Orange is the New Black and Stranger Things.
The Australian reported – and Netflix confirmed – that down under is being used as a testing ground for price hikes. According to the report, the streaming service has upped basic service from $8.99 per month to $9.99, the standard service from $11.99 to $13.99 and the premium service from $14.99 to $17.99. However, The Australian was incorrect, according to Netflix, when it categorized this rate increase as a new “weekend surging” model. No one, including Australians, will have to pony up extra cash for enrolling in a Netflix plan on the weekend.
Sadly, the streaming service is exploring the willingness of customers to stomach another price increase with these Australian tests. The company has learned from its past mistakes in this department, most notably the disastrous 2011 rollout of the short-lived DVD-only service Qwikster and a potential 60 percent rate rise for some customers. In response, customers cancelled their subscriptions en masse, flushing Netflix stock right down the drain along with it. At the time, Netflix was getting a bit too big for its britches. The streaming service’s first original series, House of Cards, didn’t premiere until 2013 and its small screen Marvel empire along with its other addictive originals were still on the deep horizon. Basically, they needed to slow their roll.
But just four years later, Netflix had become a powerhouse; the Golden State Warriors to everyone else’s Philadelphia 76ers. In 2015, the company rolled out a gentle one dollar price increase to the general acceptance of most subscribers. It helped that binge-watching had suddenly become A Thing and that Blockbuster officially folded in 2013.
Consider Netflix’s Australian experiment a taste-test as they try to gauge user-response for another uptick in fees. Fortune muses that the company may be focusing on Australia because of a “recent decision to extend the federal government’s 10 percent goods and services tax to cover ‘intangible supplies,’ including digital content and streaming services like Netflix. Nicknamed the ‘Netflix Tax,’ the extended tax will start affecting companies like Netflix when it goes into effect on July 1.”
After assuring customers that the weekend surge pricing is nowhere near reality, Netflix went on to explain in an emailed statement to Fortune: “We continuously test new things at Netflix and these tests typically vary in length of time. In this case, we are testing slightly different price points to better understand how consumers value Netflix. Not everyone will see this test and we may not ever offer it generally.” The key word there being “may” not.
The truth of the matter is that Netflix is closing in on the top of the food chain in television’s carnivorous ecosystem. It has provided a steadily improving product for low-cost for years while gradually becoming more and more entrenched in pop culture. Hell, the company is even synonymous with banging now. At this point, Netflix would be foolish not to start jacking up the price.