A recent study by consumer analytics platform CivicScience indicates if Netflix raises the prices on its ad-free tier, around 39% of all Netflix users say they would ‘most likely’ cancel their subscription outright according to Indiewire.
Another 31% say they would most likely choose to downgrade their subscription to Netflix with ads, and only 29% will continue to subscribe to ad-free Netflix.
CivicScience surveyed close to 4,000 U.S. respondents for its survey conducted earlier this week – just days after a Wall Street Journal report indicated that Netflix is discussing raising the monthly rate for its ad-free users once the SAG strike is over.
What’s not clear here however is the issue of ‘price elasticity’ according to Wedbush Securities analyst Alicia Reese. She indicates the survey doesn’t properly address how much the price hike would have to be – a $1 jump would likely cause a much smaller exodus than a $5 jump.
She adds that the streamer itself knows this and already has plenty of insight regarding the economics their users will tolerate: “If Netflix’s research shows that they will lose one-third of their premium subscribers on a $1 monthly price increase, they would be unlikely to implement the price increase.”
In the wake of the WSJ report, Netflix co-CEO Ted Sarandos responded to the news at the Bloomberg Screentime event this week saying he had “nothing new to announce” in terms of price increases.
An earlier study by CivicScience in August found that cost of living and inflation are impacting streaming subscriber numbers across the board with one in three U.S. adults having reduced or are planning to reduce spending on streaming subscriptions.
The monthly percentage of those with four or more streaming subscriptions has also steadily declined all year.
The report comes as Netflix has announced plans (via Variety) to open its first permanent bricks-and-mortar locations with two to hit the U.S. in 2024. The retail locations are dubbed mini theme parks to sell merchandise, food and drink, and include ‘immersive’ installations based on their hit shows like “Squid Game” and “Stranger Things”.
