Consumer Love Affair With Netflix Gets Rocky As Sub Fees Rise, Says Study

Diffusion Group study finds increases of even a dollar or two take a toll
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PLANO, TEXAS—Is it possible to put a price on love? Research firm The Diffusion Group (TDG) was determined to find out –at least when it comes to consumers’ love affair with Netflix. What TDG found is enough to raise doubts among even the most hopelessly romantic.

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Prompted by an anticipated price increase, which Netflix announced Jan. 15 –a bump of $1 dollar per month for the Basic tier to $9; $2 per month to $13 for the Standard tier; and $2 per month for the Premium tier to $16—TDG queried about 2,000 U.S. adult broadband users in December 2018 to gauge their reaction to subscription fee hikes.

The survey found that 16 percent of Netflix subscribers said a $1 monthly increase would make them likely to either downgrade to a lower service tier or cancel their subscription altogether.

“While TDG believes that Netflix will endure any short-term backlash from these increases, it is undoubtedly reaching a level of price resistance across all tiers,” said TDG President Michael Greeson.

For the survey, TDG split Netflix subscriber respondents into three exclusive groups. One was asked what they would do if the SVOD OTT service raised monthly fees by $1; another was asked about the impact of a $3 per month hike; and the third about a $5 monthly increase

Among those in the $1 monthly hike group, 8 percent said they would downgrade, and another 8 percent said they would cancel. Of those in the $3 monthly increase group, cancellation rates doubled, and downgrades tripled. Among respondents in the $5 monthly increase group, cancellations grew to 38 percent and downgrades climbed to 17 percent.

In Greeson’s view, other SVOD providers should take the findings to heart. “Netflix is the most highly valued SVOD service and enjoys the most loyal subscribers. As such, if it encounters resistance at these pricing levels, undoubtedly others will, as well.”

The findings are part of TDG’s latest Quantum Video Behavior study. More information is available on the TDG website.