Netflix today announced their 2014 Q1 earnings and revealed they now have over 48 million users worldwide and quarterly streaming revenue topped $1 billion. In what was to be expected, a letter to shareholders outlines the plan to increase monthly fees for new users, while existing users will stay at current pricing “for a generous time period”:
Our current view is to do a one or two dollar increase, depending on the country, later this quarter for new members only. Existing members would stay at current pricing (e.g. $7.99 in the U.S.) for a generous time period. These changes will enable us to acquire more content and deliver an even better streaming experience.
As for existing users, they won’t be immune from price hikes as Netflix CEO Reed Hastings said in an interview fees will rise in all 41 countries the company operates. As for the ‘generous time period’ mentioned in the shareholder letter, Reed clarified that will only last one to two years, reports Reuters.
Netflix has done a pretty decent job while staying at their $7.99/month price, but of course it could get a whole lot better. You do get what you pay for and a price increase will definitely allow the company to expand their libraries with better content.
Nobody likes seeing price increases, but Netflix knows most people will stick to their brand due to view exclusive titles such as House of Cards (they called Season 2 a “big hit”), plus being able to consume the streaming service from pretty much anywhere on any device. Last month, Warner Bros. bypassed Canadian cable companies and opted to exclusively stream their sci-fi series ‘The 100’ on Netflix Canada.
Also, the fact competition is relatively non-existent right now means Netflix has the upper hand, especially in Canada. That will change soon, as Rogers has a Netflix-rival in the works, while Bell and Astral Media have plans to also introduce a streaming service.
Click here to sign up for Netflix while it’s still $7.99/month—the first month is free. Would you be okay with a $1-$2 Netflix increase? Or would that make you want to cancel the service?
Update April 22: Netflix tells the CBC a more definitive timeline for price increases for new members, which will happen within their current fiscal quarter, before June 30:
Netflix has confirmed a price increase for new subscribers in the U.S. and Canada.
A company spokesman said it would be a “modest” increase of $1 to $2 and would go into effect this quarter (before June 30) for new Netflix members.