Parks Associates Analysts Following Aereo Case / Netflix Raising Prices

by Brett Sappington | Apr. 22, 2014

Parks Associates Chart - Netflix SubscribersParks Associates analysts are closely following the Aereo case today and Netflix raising its prices. Two analysts provided the following comments and related research about Netflix's news:

Brett Sappington, Director of Research, Parks Associates (@BrettsView):
- Netflix and other OTT players are faced with rising content costs and fixed revenue streams. So, something ultimately had to give.
- Raising the price for new customers could have an additional benefit for Netflix in retention. Any subscribers who leave will now have to pay a higher rate to re-join Netflix. So, some subscribers may think twice about canceling.
- We did some research last year showing Netflix subscribers are willing to pay more to get more content:

Glenn Hower, Research Analyst, Parks Associates (@GlennatParks):
- Netflix is probably also realizing that continuing to commission original content is really expensive, and contractual increases usually accompany season renewals of episodic content. Netflix has no advertising for which to charge a premium, nor can it renegotiate carriage agreements like a cable networks. The only thing they can really do to offset costs is raise subscription fees.

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