Netflix, Inc. (NASDAQ:NFLX) will be increasing the subscription charges of its streaming customers later this year. That would mean that the most loyal subscribers would face the price hike in the United States. The subscribers would be given an option to watch the video on standard definition or the high definition. Their decision would enable them to either retain their current charges or start paying higher charges.
Grandfathered Plans
Netflix, Inc. (NASDAQ:NFLX) is focusing itself on the subscribers who were having ‘grandfathered’ plans. Earlier, customers have signed up the streaming connections with a price tag of $7.99 for HD viewing before the fresh pricing tiers were disclosed. Now, such customers would be provided with an option to select either standard definition or high definition. If the customer opts for SD, such connection would continue to attract a pricing of $7.99 a month.
On the other hand, those who opt for HD would have to shell out $2 more at $9.99 a month to continue watching in HD mode. Currently, the expectation is that the rate hike would happen only in the United States. There was no clarity whether the streaming video firm would follow the similar pattern in the international markets also.
Expects Modest Churn Elevation
Netflix, Inc. (NASDAQ:NFLX) indicated that it was not worried if the users shift to other service providers as a result of the price hike. The company said that these members were with the firm in the last two years and sees modest changes in the churn rate. The company enjoys the early entrant tag and commands a significant subscribers’ base though there are fresh players entering the space.
On Tuesday, Netflix, Inc. (NASDAQ:NFLX) indicated an addition of 5.59 million customers in the fourth quarter. That took the total subscriber base to 74.76 million. Of that, close to 45 million were from the United States. However, America witnessed a slower addition of subscribers in the fourth quarter. Investors cheered the fourth quarter financial results of the company by lifting its stock price by more than 3%.
