What is the future of Netflix

Further price increases at Netflix in sight

From TECHBOOK | April 21, 2021, 6:44 p.m.

The subscription prices of the US streaming provider Netflix were recently also raised in Germany. With an expansion of the offer, Netflix hopes to be able to demand even more money from subscribers in the future.

Provider Netflix published the current quarterly report on April 20. The increases are less than forecast. Nevertheless, the numbers for Netflix are a sign that prices can be increased further in the future.

Subscription numbers fall short of expectations

The size of the user base of the streaming service grew to 208 million in Q1 2021. That is 13.6 percent more than in the previous year, but the forecast of 210 million paying subscribers could not be achieved.

Netflix had expected an increase of 6 million new subscriptions for Q1 2021. However, only 4 million were actually completed. In Q1 2020, the new growth of 15.8 million subscriptions significantly exceeded the forecast of 7 million. However, this can mainly be seen as a consequence of the outbreak of the corona pandemic. But in comparison, the growth of 4 million subscriptions seems of course small. Also the limited offer, due to the stopping of many series and films, could be a factor for the slower growth, according to Netflix.

Due to the lower than expected growth, Netflix has lowered the forecast for Q2 2021 to 1 million. That is just a tenth of the growth of 10 million new users in Q2 2020. However, Netflix expects a strong second half of the year with new seasons of popular series and new films. Including sequels to "Money Heist" and "The Witcher" and new titles such as "Don't Look Up".

Will Netflix get even more expensive in the future?

Netflix was able to increase its revenue in Q1 2021 by 24.2 percent year-on-year to approximately 7.2 billion US dollars (USD). The company has posted a net profit of 1.7 billion USD - significantly more than in 2020.

The company is not only interested in subscriber growth, but also in keeping members who are already paying. According to the company's own information, the churn rate in Q1 2021 is below the previous year's level. For Netflix this is a sign that “if we improve the service, we can also ask a little more.” In other words: In the future, streamers should expect even more expensive Netflix subscriptions.

Most recently, Netflix had increased prices in Germany, both new and already concluded subscriptions. Since then, the HD subscription has now cost € 12.99 instead of € 11.99 and the Ultra HD subscription € 17.99 instead of € 15.99. The SD subscription remains at 7.99 euros.

Netflix under pressure

The streaming market is becoming more and more competitive. Not only Disney Plus holds many exclusive rights to high-quality cinema productions and has withdrawn its IPs such as Marvel and Pixar from Netflix. Other services such as Apple TV +, Amazon IMBd TV and HBO Max are also trying to establish themselves on the market.

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