As streaming pioneer looks to increase revenue, executives are doing all they can to push subscribers to ad-supported tier, and making it look like a better deal in the process
Netflix Inc. announced another price increase for its streaming service Wednesday, which made its cheaper, advertising-based offering look like an even better deal — and that is the point.
The reason: Netflix would rather push cost-conscious consumers toward its $6.99-a-month plan that includes advertisements, which launched last year. The reason is rather simple: To entice advertisers and make substantial money from that business, Netflix needs as many subscribers as it can get watching those commercials.
“They are increasing prices for different plans in order to essentially move people either to their more expensive standard and premium plans, or to the ad-supported tier,” he told MarketWatch in an interview. “Now, the reason why they want to do that is, if they get people to pay more for the standard and premium tier, that increases their average revenue per user, that makes them more money.
“I expect that price to probably stay there until they reach a first benchmark, critical-mass subscriber plateau,” Katz said, though that could take a long time.
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