Are subscriptions services about to escalate in price?
Subscription services surround us everywhere; businesses are even encouraged to incorporate them as a form of passive income—where you create content once and sell it many times over, 24/7.
I must admit, until recently, I’d never seen a flaw in this model. I figured, as long as a provider continued to offer quality content, people would continue to subscribe. However, Netflix may be about to prove me wrong.
The company recently announced increases in the price of its subscription service, and it’s fair to say the organisation received some backlash as a result. And not just angry rhetoric across social media, but customers actually cancelling their Netflix subscriptions in protest. For the first time in ten years, Netflix lost more subscribers than it gained. Its Chief Executive, Reed Hastings, admitted that the company lost 200,000 subscribers just in the first quarter of 2022.
This loss caused Netflix’s share prices to plummet. Some well-known investors even chose to sell their shares in the company for a loss, such was their concern. Netflix blamed a number of factors, including the war in Ukraine, increased competition, and users within the same household sharing accounts. The latter is an ongoing headache for Netflix; the company has been trying to crack down on account sharing for a while, particularly in South America, and it has introduced various measures to try and force individuals into having their own accounts.
I share my account with others in my household. I use Netflix at home and will continue to use the same account when I go to university. I also allow my grandparents to use my account; technically, you could say it’s shared over three households—but let’s not forget that I pay for this privilege. A subscription of £10.99 per month allows two users to watch the service simultaneously, so why shouldn’t I use what I’ve paid for?
It's been more than two years since I’ve looked at Netflix’s packages. A basic account is £6.99 per month, which only allows for one viewer at a time. This also doesn’t allow for HD viewing, which is nothing short of an embarrassment in 2022. I also completely forgot about their premium offering; for the princely sum of £15.99 four viewers can watch at once, and in ultra-HD. But is it really worth an additional fiver to view content in 4K?
Netflix are considering offering additional subscription packages that will be significantly cheaper than these, but which will include adverts. This isn’t revolutionary—in fact, it’s just an online version of cable TV. This feels like a bit of an insult, considering Netflix has always been seen as the alternative to expensive cable TV packages—yet they now charge almost as much as cable channels charge their viewers.
Does this mean we will see a reduction in companies offering subscription models? I highly doubt it, they only seem to be increasing. Netflix has many competitors these days, such as BritBox, Disney+ and Peacock, to name just a few. Sky even has its own version these days, with NowTV. Online courses also seem to be popping up everywhere, with many people offering training on a subscription basis. Even YouTubers are offering courses; perhaps in the hope you’ll forget you’ve subscribed to them, and they’ll earn a little more passive income as a result.
It's not just entertainment companies that use a subscription model. Software companies have shifted towards subscriptions, rather than allowing users to purchase a one-off licence, as we spoke about in this article on our sister site, Novus Marketing Solutions. There are also subscription services such as Audible for audio books, and the giant that is Amazon Prime; subscribers enjoy free delivery on products from their site as well as Amazon’s own streaming platform, Prime Video.
With all these different companies using some form of subscription model, it’s safe to say the practice isn’t going anywhere. Instead, we’re maybe ready for its next evolution. Netflix clearly needs to make a change if it hopes to win back subscribers. Hopefully, we’ll be greeted with exciting new variants, rather than simply lazy price increases.
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