Netflix and Binge Watching

In July 2011, Netflix enacted its plan to split live streaming and DVD mail delivery into separate plans, meaning a rise in prices for customers. Stock originally rose, but the company soon lost nearly 83% of its original value before recovering a few months later. Now, in 2014, Netflix has announced yet another price hike for new customers, yet with much less resistance. How does the booming company stay afloat and even prosper despite these increases in price?

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In an article published in Wired Magazine entitled "Netflix Inside", author Daniel Roth explores some possible reasons for their success.

One reason for their unbelievable success may be due to their attribution of the price hikes to their need to provide even more high quality content to their viewers. CEO Reed Hastings claims that the changes in price will allow them to “acquire more content and deliver an even better streaming experience.”

Perhaps there is enough demand from existing customers for new content or a more extensive array of choices that they are willing to tolerate a rise in price. Personally, I find this to be a very compelling point. As an avid Netflix user, I can confirm that the majority of consumers wish for more episodes and movies to be added so they can continue catching up on their favorite series.

Further, the broadening of Netflix’s selection to include original shows such as “House of Cards” and “Orange is the New Black” may be having a huge impact on the popularity of the site. Hastings pointed out in a press conference that viewers would be getting a lot more content for their money, and that is they wanted to keep seeing this “great original content”, they would have to expect an eventual increase in price.

This is an excellent point by Hastings. Shows like Orange is the New Black and House of Cards can only be watched on Netflix, not on regular TV, so anyone who wishes to watch those shows is required to subscribe to the website. These two shows are hugely popular, and it makes sense that anyone who wants to continue having them updated be willing to pay a little extra money so that Netflix can continue providing.

A final point in this article points out that Netflix gives viewers the ability to binge watch, an activity described by executives as “watching multiple episodes in one sitting.” Netflix Chief Content Officer Ted Sarandos said that they were dedicated to staying “focused on what [the consumers] like and what they like is to watch more than one episode at a time.” He also hinted that the site may soon consider adding chunks of episodes at a time instead of full seasons, which he claims will “work well and fit with [their] brand promise.”

Where else can you have a full season of episodes just a single click away? Netflix truly is an asset for those who like to watch many episodes at once instead of waiting for the weekly episode on cable TV. In fact, the name “Netflix” has become nearly synonymous with “watching an entire season of your favorite show in under a week”. Overall, the consumers seem to be accepting the rising prices with little resistance due to their large demand for the products that only Netflix is able to provide: original shows like “Orange is the New Black”, a wide array of movies and tv shows, and the ability to binge watch.