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Netflix’s 25% Price Hike Expected to Cost Up to 480,000 Subscribers

Phillip Dampier June 20, 2016 Consumer News, Online Video 1 Comment

Netflix-logoA $2 monthly price hike for many longtime Netflix subscribers could cause up to 480,000 customers to cancel the service, according to a Wall Street analyst.

Long-standing Netflix customers began seeing $2 price hikes — from $7.99 to $9.99 starting last month. The “two-concurrent stream” HD plan is Netflix’s most popular, and those subscribed the longest will be the last to be affected by the price increase. Customers who enrolled at the $8.99 price implemented in May, 2014 will also pay $9.99 a month starting this October.

“Impacted members will be clearly notified by email and within the service so that they have time to decide which plan/price point works best for them,” Netflix said in a statement.

Netflix’s new subscriber growth had already cooled as content acquisition costs reached new highs, making it harder for Netflix to license new content to keep customers happy with new releases. Nomura Securities analyst Anthony DiClemente believes up to 480,000 current Netflix customers might cancel service after the rate hike takes effect, especially as competing streaming video services like Hulu and Amazon continue to grab market share.

Despite the potential for customer losses, Netflix still stands to gain up to $520 million in new revenue from the rate increases alone. Netflix says it intends to spend the money on content licensing and producing more shows for Netflix customers. A Netflix executive projected the company would spend more than $6 billion in 2017 on content licensing, up from $5 billion this year.

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Len G
Len G
8 years ago

It’s still worth it. You can’t do better with cable. Cable has too many commercials (if they cut the ad time in half, there would still be too many). Antenna / Netflix / MagicJack / Pirate Bay. All Done. On top of that, you can find DVDs for 4 or 5 dollars on eBay or Amazon. The same one’s that went for $20 or $30 when the industry had the upper hand. It’s comforting to know that all of this result, the low prices, the “content over the internet”… stemmed from one event.. Napster. After Napster succumbed to the litigation… Read more »

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