Netflix is Raising Prices on Two of Its Three Subscription Plans
The change could affect millions of Netflix’s 52 million U.S. members.
Netflix (NASDAQ: NFLX) announced it was raising prices on two of its three subscription plans last Thursday. The company’s standard streaming plan, which lets subscribers watch TV and movies on two screens and in high definition, is increasing by $1 a month to $10.99. Its premium plan, where subscribers can watch streaming video on four screens and in high definition or ultra high definition, will go up $2 a month to $13.99.
The basic plan, which lets subscribers watch on only one screen at a time in standard definition, will remain at $7.99 a month. The price increases could affect millions of Netflix’s 52 million U.S. customers, reports The New York Times. At the end of the second quarter, Netflix had nearly 104 million members, including 51.9 million U.S. members and 52.0 international members.
The revised pricing for new customers is effective immediately, after a one-month free trial. Current subscribers will be notified of the change in pricing starting October 19, and they will have 30 days to choose to keep their existing plan, change to another plan, or cancel their subscription.
‘From time to time, Netflix plans and pricing are adjusted as we add more exclusive TV shows and movies, introduce new product features and improve the overall Netflix experience to help members find something great to watch even faster,’ the company said in a statement.
According to CNN Money, Netflix raised prices in Australia and Canada this summer.
By comparison, Hulu is running a promotion through January 9, 2018 for its streaming service. The limited-commercials plan is $5.99 per month for the first year, after the free trial, and $7.99 per month after that. Its no commercials plan is $11.99 per month.
In the second quarter, Netflix had better than anticipated results in terms of membership, acquiring 1.1 million new U.S. subscribers. For the third quarter, Netflix expects a slowdown in membership acquisitions, estimating that there will only be 750,000 new U.S. and 3.65 million international subscribers.
Among its strengths is Netflix’s original content with shows like House of Cards, Stranger Things, The Crown, Narcos, and the Unbreakable Kimmy Schmidt, and it is bringing more of that to the streaming screen in the third and fourth quarters. Original content highlights coming soon include:
- Riverdale, season 2 premier on October 12
- The Day I Met El Chapo: The Kate del Castillo Story, season 1 premier on October 20
- Stranger Things, season 2 premier on October 27
- Alias Grace, season 1 premier November 3
- Godless, season 2 premier November 22
Investors reacted favorably to the news. On the day the announcement was made, Thursday, October 5, Netflix stock closed at $194.39 per share. As of 7:58 PM Eastern on Friday, October 6, 2017, Netflix stock was valued at $198.02 per share.
How will the price change impact memberships? Netflix may see some cancellations, but we do not think it will be a significant number. Price doesn’t seem to be what really drives the popularity of streaming TV and video services like Netflix, Prime Video, Hulu and CBS All Access. Instead, it is access to original or exclusive content, and Netflix has done an excellent job or providing both original programming and content not available on other streaming video on demand services.