Streaming television has become as common as cable - and at the forefront of it all, Netflix's convenient monthly prices are at least partially responsible for revolutionizing the way we watch TV and movies. With the service's affordable pricing and access to a rich library of films and TV shows (as well as original movies and TV series too), users have enjoyed rates starting from $7.99 for early adopters of their two-stream HD service.
For a while, the particular subscriptions have varied in price based on when the user signed up. Users who started with Netflix back in the beginning have been enjoying the same rates to this day; however, what with Netflix's growth and the company increasing the number of original shows that it produces, prices are raising in the U.S. starting in May.
Variety reports that Netflix has announced that rates for users who were previously paying $7.99 monthly will increase by $2 in May, based on member billing periods. In October, users who signed up for the HD plan at $8.99 following the May 2014 price increase will be rolled over to $9.99.
In a statement, Netflix said that impacted users "will be clearly notified by email and within the service so that they have time to decide which plan/price point works best for them.” Later this month, users on the same two-stream HD service in the UK will experience a similar hike, as they are “ungrandfathered” from previous pricing plans and will begin to pay £7.49 per month (which is roughly $10.57 USD at the moment).
The announcement may not come as much of a surprise to some, as Netflix had previously stated that there were changes on the horizon for the second quarter of 2016, and that a substantial number of subscribers would see the price hike accordingly. Roughly 17 million Netflix users will be affected by the price hike in May, according to UBS analyst Doug Mitchelson. “We believe incremental price increase churn will be low (3%-4% of the cohort over 2Q/3Q)," Mitchelson reported on behalf of UBS. Netflix CEO Reed Hastings and CFO David Wells also addressed the issue of the price hike when it was first put on the table in January, stating in a letter to the company's shareholders that "given these members have been with us at least two years, we expect only slightly elevated churn."
While the price hike may affect some users, the numbers and overall customer loyalty to Netflix don't lie. Even at $10, Netflix is still more affordable than Hulu's $11.99 per month no-commercial subscription, HBO Now's $14.99 per month subscription, and Showtime's $11.99 streaming service. With a base of customers so large that the profit allows Netflix to produce its own media,the price hike isn't likely to affect the year's overall profits.