Imagine going to your favorite coffee shop and having the waiter inform you the pricing has changed. Instead of $3 for a cup of coffee with cream and sweetener, you will now be charged $2 for a black coffee, $1 for creamer, and $1 for your choice of sweetener. If you want to pay your usual $3 for a cup of coffee, you must choose between creamer and sweetener. If you want both, you now face an extra charge of $1. Sound absurd? Well, that is the situation Netflix customers found themselves in 2011 - a 60% price hike to retain the same service.

In early 2011, Netflix consumers paid about $10 a month for a package consisting of streaming video and DVD rentals. In July 2011, the company announced a packaging change. Customers wishing to retain both streaming video and DVD rental would be charged $15.98 per month - a price increase of about 60%. In 2014, Netflix also raised its streaming video subscription price from $7.99 to $8.99 per month for new U.S. customers. The company also changed its policy of 4K streaming content from $9.00 to $12.00 per month that year.

QUESTIONS:

• How did customers of the 18-year-old firm react? Did they abandon Netflix?
• How much will this price change affect the demand for Netflix's products in the future?