Making good on Netflix CEO Reed Hastings’ heads-up last month that the company will hike prices for its streaming business, Netflix has put through a 10% price rise in the Eurozone for its standard two-stream HD subscription service. Cost hike immediately affects only new members.
Analysts doubt, however, that the price bump will cause any significant exodus of clients from Netflix’s burgeoning – and already significant – Euro business.
Previously priced at €8.99 ($9.90) per month, as of Monday, Aug. 17, Netflix’s two-stream HD plan is now being sold at €9.90 ($10.90) in the Euro Zone, where Netflix now operates, for example, in France, Germany and Netherlands. In affluent – and pricey – Switzerland, this service will now cost CHF 14.90 ($15.20), up from CHF 12.90 ($13.20).
“As a thank you to existing members, their current plan and price will not change for one year,” a Netflix source said Tuesday. Nor will the price hikes affect either Netflix’s basic one-stream-at-a-time, standard-definition service – which costs €7.99 ($8.80) in France – or its premium four-streams-at-a-time offer (€11.99; $13.30), which includes access to Ultra HD 4K content.
Echoing an email sent to new U.S. subscribers in 2014, when it announced a U.S. price hike from $7.99 to $8.99, a Netflix source justified the price rise to Variety “to continue adding more TV shows and movies, including many Netflix original titles.”
The bump comes as Netflix is plowing into original content production in Europe, seen in its first commissioned French-language TV series, “Marseille,” produced by Paris and L.A.-based Federation Entertainment and starring Gerard Depardieu.
Production of original content is “an ongoing strategic goal” for Netflix, said Guy Bisson at Ampere Analysis. “Clearly, production is more expensive than acquisition, but when a company is pan-regional and needs to use rights flexibly, it gets that with original production.”
Netflix’s international subscriptions stood at 23 million at the end of June, compared with 42 million in the U.S. Netflix’s take-up in continental Europe has not been officially broken out, but is thought to be already substantial. Ampere Analysis estimates Netflix customers for the second quarter of 2015 at 1.9 million for Germany, 1 million in the Netherlands and 900,000 for France.
The Netflix fee hike is unlikely to create huge churn, however. “I don’t think the price rise is an issue,” said Francois Godard, at Enders Analysis. “There is such a big difference in price points between Netflix and traditional pay-TV services that at this time Netflix’s hike is not a deterrent for users.” France’s giant paybox Canal Plus costs around €40 ($44.20) per month.
Elsa Keslassy contributed to this article.