Apr 21, 2014

Will Netflix’s decision to increase subscription prices cost it customers?

Netflix is planning to increase subscription prices by $1 to $2 a month according to Bloomberg Businessweek. Is this enough to cause the company to lose customers? People freaked out when they separated the DVD rental and streaming video business and it took them a few quarters to recover. 

I doubt it, the streaming price is so low right now that it won't matter much if it goes up a couple of bucks. Hopefully it will help Netflix get some better, more recent content. And that might end up pleasing subscribes quite a lot.

I would not expect to see much impact. Compared to earlier changes where they split DVD and streaming, the price increase will be modest. Also, according to the press reports that I’ve read, the company will grandfather existing customers at the current rate, at least for some period of time. Lastly, ISPs have made no secret that they intend to make customers pay for bandwidth and also charge companies like Netflix for the privilege of offering their content. Netflix has already had to pay up to Comcast to prevent throttling, and other ISPs like AT&T continue to demand additional money to let their customers stream Netflix without throttling it and degrading quality. This makes me FURIOUS at AT&T, my ISP. I already pay them every month, and they still want to charge Netflix extra!?!? Prices for content also continue to increase, so considering the extortion by ISPs and additional content costs, I am willing to accept a small increase and suspect most other customers are as well.

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