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Will Higher Prices Tune Out Subscribers — Netflix

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Will Higher Prices Tune Out Subscribers — Netflix

Netflix is squeezing a bit more out of its customers. But the price increases will help Netflix continue to expand its services and improve the quality of streams for future use by consumers, as well as fund ongoing and new Netflix-exclusive projects. Its most popular plan, which costs $10 for HD and viewing on two screens simultaneously, will increase by $1, to $11 per month. Subscribers will be notified in two weeks.

Netflix is cheaper than many of its competitors despite the current price hike. The basic plan that offers a single SD stream will stay at $7.99 a month.

The price for another plan that includes ultra-high definition, or 4K, video, is going up by 17 percent, to $14 from $12 a month. Netflix most recently raised prices for new subscribers in late 2015, with the change being rolled out to existing subscribers in mid-2016. However, Netflix knows what it's doing.

RBC Capital Markets analyst Mark Mahaney believes Netflix's programming line-up is so compelling that the service could charge even higher prices and still retain most of its audience.

Folks just keep coming. When the bulk of that process happened a year ago, media and public chatter rose to such a degree that Netflix blamed it for a missed quarter of subscriber growth. "The content, not price, is the leading churn/churn-back factor amongst Netflix subs".

Netflix and rival Amazon Prime have been pumping money into original shows to win fans and set themselves apart in an increasingly competitive bid for viewers' time. The company expects to spend almost $7 billion on content for its service next year, including movies, TV series and comedy specials. "There are so many great shows we don't have yet".

The full impact of the hike will play out over several quarters, but for now, the timing is flawless.

Looking forward to the second season of Stranger Things?

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