Leading online streaming service providers like Netflix, Disney, and AMC are increasing their monthly subscription rates for U.S subscribers. As for Netflix, this increase won’t be small: prices across all three of its streaming plans are now 13% to 18% higher for new users as of Wednesday morning.
Besides Netflix, Disney increased Disneyland ticket and pass prices by 7% to 10% last week. Earlier this month, AMC also boosted its monthly rates by 10% to 20% across some of the country’s most populous states.
But aren’t they afraid of losing customers because of increased subscription rates?
The answer is no.
Reason being, when you're the world's leading premium streaming service provider, theme park operator or multiplex ticket taker, you'll stretch your pricing elasticity to explore your customers’ limits.
Increased prices haven’t deterred Disney’s attendance levels through most of its gated parks. Since 1989, it has been raising its domestic theme park prices and the foothold has still not diminished. AMC just started offering its plan that allows film buffs to check out as many as three premium screenings for one monthly price, but after signing up more than 500,000 members in just a few months, it can adjust prices in markets where movie tickets are more expensive. As for Netflix, this is the fourth time that it has increased its U.S. rates in five years. That’s a whopping 63% increase to its most popular plan, offering high-definition streams on two devices simultaneously.
With people opting for convenience, they are ready to shell out a couple of bucks more. Also, the price increases seem large on a percentage basis, but they're just a couple of bucks each.
Long story short: great companies with good audiences can get away with pushing through higher prices, and that, in turn, could also make them great investments.