Netflix may have started as a modest streaming service, giving viewers the opportunity to consume entertainment that only large TV and Hollywood studios could produce. But as consumers started ditching traditional cable packages for internet streaming, Netflix became a giant in its own right, producing big entertainment for all segments of the population.
As the company expands and brings in major talent like Sandra Bullock, it’s clear that Netflix is giving its viewership what it wants. Better yet, the continuous investment in original content is also making Netflix a power player in the industry, and its stock price is rising as a result.
But most importantly, the company is reaping the benefits of putting so much into original work — namely, the freedom to raise its subscription prices just because it can.
Netflix announced recently it’s raising its prices this year, a change that comes one year after it last raised prices. Almost immediately afterward, Hulu, one of Netflix’s main competitors, announced it was cutting its prices, showing the media giant’s rapid growth is clearly scaring similar providers. Needless to say, this dynamic is what takes place when entrepreneurs are able to compete openly, giving consumers more affordable options.
Will Netflix Continue to Grow Despite Raising Its Prices?
After some volatility, Netflix’s stock shot up. With the company now raising prices, investors may have to wait until the end of 2019 to have a better grasp of how strong the company truly is.
If consumers stay with the media giant despite all the changes, it’s likely that Netflix will continue to expand its media production. This growth could surely instigate competitors such as Amazon and Hulu to up their game while further lowering their prices or offering more perks to their consumers. Still, Netflix would reign supreme — unless, of course, others enter the field with something else Netflix just can’t offer.
Perhaps that's exactly what may end up shaking things up in 2019.
In a recent letter to shareholders, Netflix clearly stated that other streaming services do not keep its executives up at night. Instead, it is the rise of other forms of entertainment such as YouTube and the online game Fortnite that could potentially disrupt the company’s market share.
"Our focus is not on Disney+, Amazon or others, but on how we can improve our experience for others," Netflix said in the letter. "We compete with (and lose to) Fortnite more than HBO. When YouTube went down globally for a few minutes in October, our viewing and signups spiked for that time."
To the company, what matters is that consumers are spending more time on its platform. And while streaming competitors only make “a difference on the margin,” Netflix CEO Reed Hastings explained, other forms of entertainment are beginning to take up a lot of consumers’ time.
Interestingly enough, Hastings seems to be framing the company’s struggle as a competition against all media entities — even those that haven’t been created yet. Soon enough, new devices could be putting all forms of entertainment in one, threatening Netflix’s hold on screen time but simultaneously giving consumers more options.
Companies may fear for their future and act accordingly because of competition. But in the end, it’s because they do that the consumer ends up benefiting. Thankfully for Netflix, it knows just how to play the game.