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17th of November 2018

Television



Did Netflix Scare Away Low-Income Subscribers with Latest Price Bump?

Netflix may have cost themselves some subscriber growth with their most recent price hike. A new study shows that low-income individuals have shied away from the world's most popular subscription service since they increased their prices at the end of 2017. While other paid subscriptions services have shown subscriber growth amongst this same group since the end of 2017, Netflix has remained stagnant.

The research was conducted by Earnin, a company that offers individuals cash advances that targets low-income earners. According to their findings, companies like YouTube and Hulu have continued to add subscribers within this particular group of individuals. On the other hand, once Netflix increased prices from $9.99 to $10.99 late last year for their most popular plan and increased the cost of their family plan from $11.99 to $13.99, they stopped gaining subscribers amongst this group. Here's what the company had to say about their findings.

"When Netflix raised its prices over six months in 2016, market share (in total dollars) grew accordingly. In 2018, the increase deterred new subscribers living paycheck to paycheck from joining the platform while Hulu and YouTube grew memberships in that period by 4.5% and 15% respectively."

Earnin has access to their members' banking transactions, which makes it easier for them to collect this kind of data. A particularly interesting finding they detected is that one in eight of their users, who are generally living paycheck to paycheck, had an overdraft fee from their bank thanks to a streaming service. That little price hike could have ultimately made a big difference to some when it comes to Netflix. On average, these overdraft fees cause the price of streaming services to increase for low-income individuals.

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"Streaming services cost about $0.80 more per month once you account for the chance they trigger an overdraft. Over the past 12 months, this additional cost has averaged $0.78, $0.83, $0.79 more a month for Netflix, Hulu, and YouTube, respectively."

It's worth noting that Earnin's data is based on those who use their app. So this study isn't necessarily representative of all low-income individuals. Still, it's interesting to see that one tiny price hike could deter this group from what is otherwise far and away the most popular streaming service on the planet. It's also quite likely that Netflix made more money from the subscribers they kept and continued to add following the price increase, given the additional revenue, than they would have by continuing to see growth with this particular group.

Regardless of this study's findings, Netflix isn't hurting one bit. The company recently passed the 130 million subscriber mark and they are set to spend more money than any other studio producing content over the course of the next year. Every other studio, including Disney, who is launching their own streaming service next year, is racing to catch up with them in the streaming game. This news comes to us courtesy of Variety.

Topics: Netflix, Streaming

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