The price of a Netflix subscription for some users is still increasing, just not as soon as we initially thought.
Before May 2014, a two-stream HD subscription of the service cost customers only $7.99 per month. Then, Netflix raised its prices, first to $8.99, then to $9.99 in October for all new users. Preexisting customers, on the other hand, were grandfathered in to their plan and have been paying this low price ever since. However, as of May, they were supposed to start paying the extra buck or two.
It seems that Netflix had a slight change of heart and won't be enforcing the price hike to all customers still paying either $7.99 or $8.99 right away.
Netflix's price increase will still start in May, but company founder Reed Hastings revealed on Monday that it will slowly roll the increases out during the rest of the year.
"We will phase out this grandfathering gradually over the remainder of 2016, with our longest tenured members getting the longest benefit," Netflix wrote in a letter to investors.
There are about 22 million U.S. subscribers that will be affected by the price hike. At least some of them may be lucky enough to continue paying the lower price before it's time to pay up like the rest of us.
Customers will still be notified via email before they start being billed more money to use the service.
Why the change in the plan? "So we can learn as we go," Hastings said.
This may also have to do with the fact that Netflix can't afford to lose customers who have grandfathered plans. Back in 2011, the service's price hike led to the loss of about one million subscribers.
According to Netflix's quarterly report, the company expects that the rate of subscribers will slow down in the second quarter.
Analysts predict the company will add four million new subscribers, but Netflix forecasted that it would gain only 2.5 million new subscribers in the second quarter.
As a result, Netflix shares fell about 11 percent in after-hours trading on Monday.
However, the streaming service said that it gained 6.74 million members for this quarter, with 2.23 million coming from the U.S. and 4.51 million internationally. This was more than the 1.8 million U.S. members and 4.5 million overseas members analysts predicted. The growth is largely to do to the fact that Netflix is now available in 130 countries.
Sooner or later, the price has to increase for those with grandfathered plans, especially since the company needs the money to help fund its content. Netflix revealed it will spend approximately $5 this year and more than $6 million next year.
Source: Buzzfeed
