Netflix will raise prices on about 17 million of its standard accounts starting next month, and most people have no idea, according to Wall Street analysts.
Back in October 2015, Netflix announced it was raising its prices for new subscribers to $9.99/month. Previously, the company eased the worries of longtime subscribers by grandfathering its rates, keeping the monthly streaming costs at $7.99 even as it began to increase streaming prices in 2014.
But the grace period has come to an end, and the 37 percent grandfathered subscribers — around 17 million people — will be asked to pay the standard $9.99 starting in May. That’s an additional $24 annually for the commercial-free service, coming from a large chunk of the subscriber base — UBS estimates that only 3-4 percent of the affected subscribers will cancel after the price hike, according to Business Insider.
Even at a 4 percent subscriber loss, that leaves Netflix with about 16.3 million people paying an extra $24 per year, bringing in an extra $392 million annually. Not a bad way to pay for more seasons of Daredevil and Jessica Jones. Unfortunately, Business Insider reports that around 80 percent of the subscribers affected by the price increase will be unaware of the changes until they are billed for the month.
Even at $9.99, Netflix is a commercial-free option with a wide variety of acclaimed original series — House of Cards, Narcos, Daredevil, Jessica Jones, Wet Hot American Summer, Arrested Development, Orange is the New Black and so much more — and has moved into original films as well, all on top of the massive amount of licensed streaming content.
UBS calculated that on average, Netflix clocks in at about $0.09 cents/hour of entertainment, trumping traditional television’s $0.30/hour. Not too shabby.
Source: Business Insider