Expect Netflix prices to increase in the next couple of weeks.
CEO Reed Hastings recently spoke with analysts that the price of Netflix is going to increase due to the type of content on Netflix.
CEO Reed Hastings told analysts that the likely price increase is due to the fact that “over the last couple of years we’ve been improving the content selection on Netflix and broadening it.” For that to continue, “we have to eventually increase prices a little bit.” He’d consider having tiers of service but first wants to “be sure we grandfather [existing customers into the new system] cleanly.”
According to recent reports, it is expected that the price will increase by one to two dollars per month. Current customers could keep their $7.99 a month price “for a generous time period” if the fees for new customers go up — possibly “a one- or two-dollar increase, depending on the country, later this quarter” — CEO Reed Hastings and CFO David Wells say in a note to shareholders.
Three years ago, Netflix tried increasing their prices and that did not go very well. This time it is apparent that CEO Hastings is trying to gradually increase prices to their customers. The previously rate hike was park of an attempt to split the company’s DVD-by-mail and streaming service. Over time Netflix was able to recover from the increase in prices. Since there has been increase in subscribers, Netflix believes that customer loyalty will not affect the number of subscribers, if the prices only increase by a dollar or two.
Many analysts expected that Netflix would raise prices given the increase of licensing costs and producing shows such as ‘House of Cards’.
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