Netflix’s Prices Are Rising Faster Than Cable

Between 2011-2022 Netflix's prices rose 2x faster than cable. During the same period, industry prices for cable and satellite television services increased +3.2% annually and US inflation rose +2.0% annually, meaning that in the US, Netflix's prices have risen approximately 2x faster than cable prices and 3x faster than inflation. According to the FCC's most recent report on cable industry prices, the average price of basic cable in the US in 2018 was $25.40 /month - with industry growth rates we'll assume the current average price is actually closer to $28.68 /month. So even with Netflix's recent price increase, the company's standard plan is still only about half the price of a typical basic cable plan and arguably offers more value with no advertising and a lot of original content that doesn't appear on TV. If Netflix continues raising prices at the same rate that it has been the past several years then it will surpass the current price of basic cable packages by the year 2032. Of course, cable prices will rise as well in an inflationary environment, so if we assume that Netflix continues raising prices at 6.2% annually and cable prices increase by 3.2% annually then the Netflix standard monthly plan will exceed a basic cable plan by the year 2043. There are enough competitors in Netflix's market between cable companies and streaming services, that if consumers are unhappy with Netflix's prices they can just use a different service. Netflix has historically spent a lot of money on acquiring content rights while also keeping prices low to aggressively grow its subscriber base and take share from competitors.