Most Netflix users would pay a lot more for their subscription, survey shows

Senior Writer
Yahoo Finance

Netflix (NFLX) could charge $15 per month or more and keep around two-thirds of their subscriber base, according to a new survey by investment bank Piper Jaffray.

The results of the survey – which polled 1,100 Netflix subscribers – illustrate the strong connection between the service and its subscribers, a connection that has grown significantly.

Piper Jaffray has conducted a survey like this before, and the last time in mid-2016, it found that 45% of subscribers would cancel if there were any increase from the current price. Today, that number has fallen to just 36%, showing that Netflix is doing a better job at showing value to its subscribers.

Netflix costs $7.99 a month for a basic plan, $10.99 for a standard plan, and $13.99 for a premium plan. The standard and premium plans allow more people to watch on one account simultaneously, and offer HD.

While 64% of respondents would absorb increases to $15 per month to watch “Stranger Things” and “The Crown,” a lot of people said they would flee if prices were to go to $20. Should that happen, only 23% of people said they would remain. Another survey question put it a different way, and found that just 6.4% would pay for Netflix if it cost more than $20 a month.

Piper Jaffray analysts noted that these surveys should be taken with a grain of salt: “It’s also important to keep in mind that with pricing-related surveys (for any product/service) responses are typically more negative than reality as customers typically suggest a lower willingness to absorb a higher price than what they’re actually willing to do in the event of raised prices,” the analysts wrote.

With that in mind, Piper Jaffray said that their analysis found that “less than 36% of subs would actually drop the service if pricing went above their current rate.”

“This leaves Netflix with significant room for domestic price increases in the coming 3-5 years,” they wrote.

This runway for price increases is new. Piper Jaffray compared this year’s data to its survey data from 2016, and found that the price a typical consumer is willing to pay for Netflix has gone up 15% to $15.50, a number that significantly outpaces the inflation (CPI) numbers of 4% over that same period.

Ethan Wolff-Mann is a writer at Yahoo Finance. Follow him on Twitter @ewolffmann. Confidential tip line: FinanceTips[at]oath[.com].

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