If you’re a Netflix user who gets their internet service through Comcast, chances are you’ve been interested in the recent announcement by the two companies of a direct access deal that will improve the Netflix experience on Comcast. Since Netflix has to pay Comcast an undisclosed (but presumably large) fee for this access, it’s natural to worry that Netflix might be passing along at least some of that cost to its subscribers.
Not so—at least not for now, according to Michael Pachter, an analyst with Wedbush Securities.
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Said Pachter:
“Near term, Netflix is going to eat it,”
Pachter doesn’t think Netflix subscribers should get too comfortable, however, as he believes Netflix’s subscription costs will be rising by $1 or $2 per month in the next year or so. The hike will be caused not primarily by the Comcast deal, Pachter predicts, but rather by increasing content acquisition and international expansion costs.
If Pachter’s prognostication comes true, do you think consumers will accept the price increase quietly?
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[via CNN Money]
No they won’t and it won’t make a difference. Stockholders don’t like eating costs and they’re the only people louder than customers.
Everyone loves to rag on Netflix, but the fact is there isn’t anything better out there. They have the most content and best streaming service. If you want content, you have to pay. Blame the people selling the content and putting up roadblocks to subscribers (ISP’s).
So subscribers may leave, but where are they realistically going to flock to? I still think personally unlimited hours for under $10 is an amazing deal.
As stated above, uimited access for under $10 is bragging rights for the consumer. Share holders want more. There is nowhere else to go (realistically for the amount of content and quality of service), so as the price goes up, the overwhelming majority of subscribers will eat it. This is much like the cost of a cheeseburger at a ski resort – burger, fries and a drink = $20.00. Where else are you going to go? Captive audience!