Netflix customers may still be stinging from the company’s much-maligned price increase in 2011. According to Wedbush analyst Michael Pachter, the company would see growth nearly stop if it increased prices, even though profits would likely go up.
Pachter’s firm conducted a survey this month and found that nearly 4 out of 5 Netlfix customers are opposed to any sort of price increase. Pachter believes that Netflix is a classic case of being unable to have its cake and eat it too.
“We believe that the central thesis of the bull case is that Netflix has significant pricing leverage, and we continue to believe that any price increase will slow growth to a crawl while driving profits much higher . . . In our view, Netflix cannot maintain high growth and high profits at the same time.”
What do you think is best for Netflix and its customers in the long run, Insiders: keep prices (and profits) low, or raise prices and bring growth to a halt?
[via Home Media Magazine]