Open Report: NFLX Pricing Power
Net/net: The data paints a picture of NFLX having pretty favorable pricing power. That doesn’t mean it has unlimited room, but here are the bits of evidence making us believe pricing power is solid. A) last time they increased prices, our tracker showed a temporary dip in net adds, but the metric never turned negative and eventually rebounded to normal levels. B) Among cancelled members, pricing or the price increases is the least popular reason for cancelling and the percentage who blamed pricing for their cancellation has decreased over time C) Last time, a relatively low percentage of subscribers were even aware of the increase and among those who were, the vast majority smoothly converted to the higher price point (and these people became less and less likely to downgrade over time) D) Even after the price increases last year, the percentage of subscribers who were considering cancelling remained flat and at series lows E) At $10.99 the sentiment that NFLX is a great deal isn’t quite as overwhelmingly positive as it is at $9.99, but the positive sentiment is still there. Subscribers still think it is a great deal at $10.99. Sentiment toward it being a great deal does fall off, though, at $11.99 and turns negative at $12.99.