‘Stranger Things’: Netflix’s expansion plans are embodied by this sweater | Brisbane Times

Netflix’s decision to boost its content budget means it could spend $US8 billion on original series and movies next year. The spending boost was designed to “pull the quality of its library even further away from its competitors”, Credit Suisse analysts wrote.

But, of course, this increased spending on content has to be paid for, through increased borrowings, and higher prices.

Netflix has struggled with price hikes in the past. In 2011, it was forced to abandon plans to increase prices after a customer revolt. As recently as 2016, when it raised prices in various markets, it faced a significant backlash.

But the reaction to the latest price increase, at least on the stockmarket, was telling: Netflix shares soared to fresh highs, suggesting investors don’t think the move would dent subscriber growth (or at least not enough to offset the increased revenue from higher prices).

In other words, Netflix finally has pricing power.

The ability to charge higher prices usually requires a differentiated service. And Netflix’s point of differentiation is its original shows.

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‘Stranger Things’: Netflix’s expansion plans are embodied by this sweater.