Throughout the course of 2016, customers of one of the biggest players in the streaming video industry will see the price of their subscription jump for the second time in the space of two years.
In May 2014 Netflix raised the price of its plans by $1 for new members, but gave millions of existing members a grace period of two years to see the increase take effect. That time is now up for most grandfathered customers, but rather than paying only one additional dollar, they will pay an extra two thanks to a second rate hike last October.
The increase is being rolled out gradually, a strategy that the company is referring to as “un-grandfathering.”
According to CEO Reed Hastings, Netflix “doesn’t particularly need the revenue in the short term, so it’s fine to just spread it out.” The revenue is earmarked for licensing and creating better content for 2017.
Hastings doesn’t seem too concerned about losing subscribers over the hike, which will impact about 37 percent of Netflix customers. The company also expects to add 500,000 new subscribers this quarter, which would offset the associated losses. But while most customers seem to feel the service remains a good value for the price, some may jump ship due to what they view as an aging catalog of offerings.
In a side note, Netflix may also be considering a downloading option in the near future. Although the company has consistently denied any interest in downloading, it may be doing an about-face as downloading becomes a more common offering among its competitors.
As Netflix continues to grow so will the cost of content, and Netflix has aggressive plans to expand. Will more price hikes be required to feed its future? Stay tuned.