As many loyal Netflix subscribers will recall, at the end of 2017, the streaming giant raised their subscription fees—and this wasn’t the first time. New data indicates that the latest Netflix price hike may have led to the loss of lower-income subscribers from the site.
According to a report from Variety, a study by Earnin, which allows users to draw small amounts of their paycheck before payday and targets low-income users, reveals the 2017 Netflix price hike led to a significant drop in new subscribers. “When Netflix raised its prices over six months in 2016, market share (in total dollars) grew accordingly,” Earnin economist Peter Griffin wrote in a blog post early this week. “In 2018, the increase deterred new subscribers living paycheck to paycheck from joining the platform while Hulu and YouTube grew memberships in that period by 4.5 percent and 15 percent respectively.”
The study found that, essentially, people don’t have extra disposable income, and thus weren’t too thrilled by the price hike (which, I mean, who was?) In case you forgot, Netflix HD went from $9.99 to $10.99 and their family plan, including the ability to stream to up to four devices, increased from $11.99 to $13.99. While at first glance that might not seem too drastic, it can really add up month after month. The Earnin study fond that the growth of Netflix subscriptions had stalled for low-income users, while other paid streaming services continued to add new users.
Griffin also revealed that bank overdraft fees may also have played a part in the process. “Streaming services cost about $0.80 more per month once you account for the chance they trigger an overdraft,” Griffin continued. “Over the past 12 months, this additional cost has averaged $0.78, $0.83, $0.79 more a month for Netflix, Hulu, and YouTube, respectively.”
While not all low-income households use Earnin, this data may not be representative of all lower-income consumers. We don’t know yet if Netflix has any plans to change their model based on these results, but rumor has it that another price increase could be coming to Netflix subscribers in the near future.
In the mean time, it’s back to your usual Netflix binge, unless another streaming service can turn your head.