When Netflix raised their prices almost two years ago from $7.99/mth to $8.99/mth for their most popular Standard HD streaming plan, they grandfathered existing members and guaranteed their current plan and price would not change for two years. That was back in May of 2014, and the price of the Standard HD plan is currently $9.99/mth. Netflix has indicated in their latest earnings report that the price will be increasing soon for those members.
In Q2 and Q3, we’ll be releasing a substantial number of our US members from price grandfathering on the HD plan and they will have the option of continuing at $7.99 but now on the SD plan, or continuing on HD at $9.99 a month. Given these members have been with us at least 2 years, we expect only slightly elevated churn.
With over 75 million members worldwide, and their recent expansion into virtually every country around the world aside from China, Netflix saw a net growth of 17 million subscribers in 2015. Netflix is crediting their original programming, such as Narcos and Marvel’s Jessica Jones, for helping to grow their membership base. The company also indicated that they are seeing increased adoption of their Ultra‐HD plan ($11.99) as more UHD TVs are purchased and more 4K resolution content is released on the streaming service.
It will be interesting to see how this all shakes out for Netflix’s user base, considering other companies like Amazon are getting into the original content game as well. That being said, Netflix has over 600 hours of original content planned for 2016, up from 450 in 2015. The company currently has plans for new seasons of 30 or so original series (including The Crown and The Get Down),
eight original feature films, 35 new seasons of original series for kids, a dozen documentaries, and nine stand up comedy specials. Netflix Original Content has been taking the charts by storm as well, not to mention garnering plenty of discussion on the Internet with shows like Making a Murderer. Marvel fans are sure to continue to be tuning in given the success of both Marvel’s Daredevil and Marvel’s Jessica Jones, both of which have received second season orders and will be joined by series based on Marvel’s Luke Cage, Iron Fist, and The Defenders with a rumoured Punisher series coming as well.
We unveiled five new original series in Q4, including Marvel’s Jessica Jones and Master of None, starring Aziz Ansari. Both combined with Narcos, Sense8, Marvel’s Daredevil and Bloodline to claim six of the Top 10 new TV shows of 2015 according to IMDB. In late December, we debuted a ten‐part documentary series Making a Murderer, which has enthralled audiences and critics alike and triggered a national conversation on fairness of the American criminal justice system.
While the letter to shareholders only spoke of U.S. pricing, we assume that grandfathered pricing in other regions will follow suit as well and will keep you posted as we hear anything further.
Are you one of those grandfathered users? Will you continue to keep your HD plan at the increased price, choose to move to the SD plan, or cancel your Netflix subscription altogether? Let us know in the comments below, or on Google+, Twitter, or Facebook.
[button link=”http://files.shareholder.com/downloads/NFLX/1372353523x0x870685/C6213FF9-5498-4084-A0FF-74363CEE35A1/Q4_15_Letter_to_Shareholders_-_COMBINED.pdf” icon=”fa-external-link” side=”left” target=”blank” color=”285b5e” textcolor=”ffffff”]Source: Netflix Letter to Shareholders (PDF)[/button]