Netflix price increase may cause cancelations

In today's edition of "Duh" a new survey says that some Netflix customers may cancel if the service raises prices as is rumored.

Okay, in fairness, the actual news is that it's 39% that may consider canceling, which is a pretty big amount. And yes, if the survey reflects actual intentions that are followed through, then it is news.

CivicScience, an opinion research group, surveyed current Netflix users and those likely to subscribe. The report shows that 39% on the ad-free tier would consider canceling their account if the cost increases and 31% would consider subscribing to Netflix Standard with Ads. Of those considering signing up, 29% would still land on the ad-free plan.

If it's true, then in order to maintain the same income, a 39% drop in customers would mean prices would go up nearly 64%. Yeah, go do the math. If your customers decrease by half, you'd have to double the cost to make the same money.

For example, at $10/customer, with 1,000 customers, you'd have $10,000 income. With 610 customers (a 39% drop), you'd need $16.40 to have $10,000 income. (Actually $16.39 would be $9,997.90 while $16.40 would be $10,004.)

If the service went up by 64%, I think more than 39% would cancel. Of course, with a smaller customer base, the cost of running the service would decrease slightly, and this ignores that entirely. But this does show that any increase in price must not trigger too much of a drop in customers, or the business hurts. Conversely, a small increase that leads to a small drop in customers could mean an overall increase.

For example, if price went up 10%, and the drop in customers was under 9%, the overall income would go up. If the price went up 20%, and if the drop in customers was under 16%, the overall income would go up. As the increase grew, the drop in customers could only grow at a smaller rate in order to maintain overall income.

So, a 39% drop in customers would still be profitable only if the prices went up 64%. I don't think that big of an increase in cost would work, so anything that lost 39% of customers would hurt the business.

All of this only matters if 39% was accurate. Is it? I don't know. They don't know. Nobody knows. The people answering the survey may have meant it, but when it comes right down to it, would they? Probably not. There's always a gap between what some people say they'll do and what they'll actually do. Some people follow through, but most won't. People are notoriously unreliable. Most people would take a Netflix price increase and keep subscribing. As long as it's not too much of a price increase.

My Streaming Life doesn't involve Netflix very often. I tested their ad-supported service for a month just to see what it was like. I watched very little. Most of their content isn't interesting to me. But that's true of most pay streaming services. The entertainment value isn't that great, and the cost is high. Netflix wouldn't lose me as a customer if their price went up. They lost me a long time ago.