×
You will be redirected back to your article in seconds

Netflix to Raise Prices $1 to $2 per Month for New Subscribers

Netflix announced that it expects to increase the cost of its streaming-video service by one or two dollars monthly for new subscribers later in the second quarter of 2014.

“We have greatly improved our content selection (in the U.S.) since we introduced our streaming plan in 2010 at $7.99 per month,” the company said. “Our current view is to do a one- or two-dollar increase, depending on the country, later this quarter for new members only.”

SEE ALSO: Netflix Keeps Up Growth Spurt, Adding 4 Million Subscribers in Q1

Netflix noted that existing members would remain grandfathered in at current pricing (for example, $7.99 per month in the U.S.) for a period of time — either one or two years — which the company characterized as “generous.”

The price increases “will enable us to acquire more content and deliver an even better streaming experience,” Netflix CEO Reed Hastings and CFO David Wells wrote in their Q1 2014 letter to shareholders.

Netflix said it decided to raises prices after it saw “limited impact” from its January 2014 price increase for new members in Ireland (from €6.99 to €7.99), which included grandfathering all existing members at €6.99 for two years.

In 2011, Netflix effectively raised prices by splitting apart streaming and DVD-by-mail plans, amounting to a 60% price increase for customers who previously paid for $9.99 a combined plan that offered unlimited streaming and one DVD out at a time. That resulted in a hit to its subscriber totals. But the new price increases are different because they would apply only to new subscribers. Netflix is seeking to “grandfather people cleanly” this time around, Hastings said in discussing Q1 2014 results, adding that Netflix’s near-term revenue will not increase substantially from the new monthly streaming prices.

Last year, Netflix tested two new tiers of services at different price points: a $6.99-per-month option with a single stream (one device at a time) and standard-definition video and a $9.99 monthly option that provides up to three simultaneous HD streams. The new price increases are independent of such usage-based tiers, which Hastings said Netflix is continuing to evaluate.

Hastings, in discussing Q1 2014 results in a webcast Monday, downplayed Netflix’s competition with Amazon.com’s Prime Instant Video, which is available to customers of the e-retailer’s program for free two-day shipping on products. Consumers are viewing Netflix and Amazon offerings as “separate channels” that provide different programming, he said.

“I’m a Prime member, and most Netflix employees are Prime members,” he said. “It’s very much not a zero-sum game… we’re both building this ecosystem around Internet video.” Amazon recently raised the price of Prime in the U.S. to $99 annually, up from $79.

Netflix is available through Amazon’s recently launched Fire TV set-top, Hastings noted, and is working to support the device’s voice-enabled search feature for Netflix content in the future.

More Digital

  • tubi tv roku

    Ad-Supported Video Service Tubi Tops 20 Million Monthly Active Users

    Ad-supported video service Tubi broke its own audience records in May: Tubi, which positions itself as a free alternative to Netflix, surpassed 20 million monthly active users last month, the company said Monday. The service’s users viewed more than 94 million hours of programming in May, according to Tubi, which also claimed to have brought [...]

  • First Media - Chris Athanassopoulos, Jocelyn

    First Media Names Chris Athanassopoulos CFO, Jocelyn Johnson as SVP of Brand

    First Media, the media company focused on millennial women audiences whose brands include BabyFirst TV, announced two new members of its executive team as it eyes expansion in 2019. Chris Athanassopoulos, previously Twentieth Century Fox’s VP finance for worldwide TV distribution, has joined First Media as its chief finance officer. (First Media’s previous CFO, Karl [...]

  • Chris Thorne - Beats

    Apple's Beats by Dre Taps Chris Thorne as Chief Marketing Officer

    Beats by Dr. Dre, Apple’s audio-products subsidiary, announced Chris Thorne — whose past gigs have included stints at EA and Jessica Alba’s The Honest Co. — as its chief marketing officer. Thorne takes on the CMO role after the departure earlier this year of Jason White, formerly Beats’ EVP and global head of marketing, who [...]

  • 76th ANNUAL GOLDEN GLOBE AWARDS --

    Viacom Partners With Tyler Perry for BET Plus Streaming Service

    Viacom’s BET Networks has teamed with Tyler Perry to create a subscription streaming service that combines the prolific auteur’s library of movies and TV shows with BET’s programming vault. The service dubbed BET Plus will bow in the fall with a handful of original series and productions and a deep library offering that will be [...]

  • Love Nature Teams with Arte, BBC,

    Love Nature Teams with Arte, BBC, Smithsonian on Natural History Series ‘Stormborn’

    Love Nature has greenlit “Stormborn,” a wildlife series about animals living in the wildlands of countries on the edge of the North Atlantic. The three-parter will bow on Love Nature’s 4K linear channel and streaming service and then play on Arte in France and Germany, BBC Scotland and Smithsonian Channel. Love Nature is the natural [...]

  • john-farrar-joins-barcroft

    Barcroft Studios Hires John Farrar as Creative Director, Ups Two Execs (EXCLUSIVE)

    John Farrar, whose credits include “The Imposter,” has joined U.K. producer and digital content specialist Barcroft Studios. The company has also upped two senior staffers, with Alex Morris elevated to chief creative officer and Caspar Norman to chief operating officer. The new recruit joins Barcroft from Nerd TV, the U.K. shingle he co-founded with Jago [...]

  • Mubi Streaming Service Launches in Southeast

    Mubi Streaming Service Launches in Southeast Asia (EXCLUSIVE)

    Film specialist streaming platform Mubi is to launch in Southeast Asia. The service kicks off with operation in Malaysia, and has plans to quickly launch in another half-dozen territories in the fast-developing region. Mubi will retain its highly curated approach of offering one new film title per day and retaining each for just 30 days. [...]

More From Our Brands

Access exclusive content