The intense competition and rapid growth of Disney+ subscriptions has Netflix thinking twice about their prices.
The release of Disney+ and Apple TV+ has Netflix experiencing a slight falloff in subscription growth. The analytics from Netflix’s fourth-quarter earnings report showed they came up short on their projections, yet again. This made it the third quarter in a row that Netflix subscriptions had not been up to par.
Netflix had already been facing a slow down in membership growth last year because of their price raise, along with competitors coming on the rise. However, their competition will only continue to grow with the introduction of newer, more convenient and cheaper media-service providers. Disney+ prices already undercut Netflix’s prices, making them more appealing to consumers from the jump. Disney+ has an option of charging $7 a month or $70 for the year, whereas Netflix’s starting price is $9 a month.
Many believe Netflix needs to realize the price-sensitivity of Americans before they start losing extreme amounts of subscribers. Needham analyst Laura Martin predicted Netflix to lose more than 4 million subscribers in the next year if they do not adjust their prices to even the playing field with their competition. She says, “Netflix must add a second, lower-priced service to compete with Disney+, Apple+, Hulu, CBS All Access and Peacock, each of which have $5–$7/month choices.”
As a whole, Netflix needs to be more affordable if they want to keep their company afloat. Martin suggests a $5-$7 per month tier for users, lessening sharing of passwords and attracting the attention of lower-income consumers.