Variety reports that Netflix announced yesterday that it plans to raise prices for new subscribers to its streaming video services by one or two dollars a month - depending on the country - but will "grandfather" existing customers at current rates for a period of one or two years.
The announcement came as Netflix said that it "added 2.25 million streaming subs in the U.S., in line with its previous guidance, and 1.75 million internationally (vs. previous expectations of 1.6 million). It ended the period with 48.35 million total."
The move is different from 2011, when Netflix tried to simultaneously raise prices and separate its DVD rental and video streaming businesses, an effort that resulted in both a customer revolt and analyst suggestions that the Netflix business model was about to crash and burn. However, Netflix quickly reversed the decision, apologized, and focused on both international expansion and original productions (like "House of Cards") that it could use to differentiate itself.
The announcement came as Netflix said that it "added 2.25 million streaming subs in the U.S., in line with its previous guidance, and 1.75 million internationally (vs. previous expectations of 1.6 million). It ended the period with 48.35 million total."
The move is different from 2011, when Netflix tried to simultaneously raise prices and separate its DVD rental and video streaming businesses, an effort that resulted in both a customer revolt and analyst suggestions that the Netflix business model was about to crash and burn. However, Netflix quickly reversed the decision, apologized, and focused on both international expansion and original productions (like "House of Cards") that it could use to differentiate itself.
- KC's View:
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It is the increased cost of original productions that Netflix is using to justify the price increase … and I suspect that this time the move will go down a lot more smoothly than the last time. The fact is that Netflix has distinguished itself with "House of Cards" and other original series, and a lot of people will be happy to pay the extra buck to have access to them.
