After nearly five months of negotiations, the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA) strike may finally be coming to an end. When it does, unionized actors can resume working with updated contracts.
But while consumers may soon enjoy new movies and television shows on Netflix, they should probably prepare for higher costs. The streaming service giant plans on hiking the price of its ad-free subscription tiers in the U.S. and Canadian markets soon after the strike is over.
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Why Netflix Is Raising Prices After the Strike Ends
According to Seth Schachner, managing director of digital entertainment consultancy firm Strat Americas, it’s logical for Netflix to change the pricing after the SAG-AFTRA strike ends. While the streaming service needs the content, it will also be paying more for it.
“These strikes have been a win for the writing community,” Schachner says. “They’re getting performance-based incentives, an increase in compensation and more clarity.”
All streaming services have been pushing apart the two tiers of ad-free and ad-supported subscriptions, Schachner says. The intention is to build profitability in an industry that is still struggling to make it work financially. That means raising prices on the ad-free tier, which can make the more profitable ad-supported tiers attractive.
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How Much More Subscribers Will Pay
Currently, the monthly fees for Netflix subscriptions are:
— $6.99: Standard, with ads. Watch on two supported devices.
— $15.49: Standard, ad-free. Watch on two supported devices.
— $19.99: Premium, ad-free. Watch on four supported devices.
Netflix has not publicly revealed how much the prices on its two ad-free tiers will rise, but Schachner predicts it will likely be an extra dollar or two.
Will There Be Backlash?
“Netflix knows that whenever they raise prices they will lose some subscribers, but they tested the threshold,” Schachner says. And since the subscriptions supported by advertisers will remain the same, those consumers won’t be impacted.
The higher price point may even draw those who were paying extra for uninterrupted content to switch to the lower price tier. Consumers want to see the movies and shows that Netflix acquires, so they’ll make the best financial decisions to continue being a customer.
“Price hikes shouldn’t just be looked at as Netflix making more money for itself,” Schachner says. “It’s a means of making streaming a better business for all, including actors and writers. It will increase offerings, replenish programming.”
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Netflix’s Timing Could Be Bad
The timing, however, has the potential to be a sore spot within the entertainment industry, says Jeremy Knauff, founder of Spartan Media.
“The fact that Netflix made this price-hike announcement right after the writers strike that dragged on for 148 days was a bad move from a public relations perspective,” Knauff says. “It won’t affect the company’s standing with customers, but it may among industry professionals, particularly writers.”
Despite coming to an agreement about compensation residuals for streaming among other concessions, the fight was long and hard.
If writers perceive the price bump as a way for Netflix to simply make more money rather than provide fair compensation, tensions could escalate again.
“The company should take significant action to further nurture and strengthen its relationships with its writers to avoid that,” Knauff says. And the last thing all concerned parties want is more nail-biting drama. Unless, of course, it’s written into the latest must-watch series.
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Netflix Plans to Raise Prices Post Actors’ Strike: Here’s What Subscribers Should Know originally appeared on usnews.com
