80% Netflix Subscribers Do Not Know About The Price Hike

According to JP Morgan, 80% of the affected streaming subscribers have no idea about the increased pricing plan from May

Netflix Inc. announced a day ago that it is all set to increase the price of its standard plan from May onwards. Previously, it hiked price back in May 2014 where it exempted the existing customers to pay more than usual. Hence now millions of streaming subscribers in the United States will start paying more for streaming their favorite movies and TV shows. However, there is a chance that a huge customer base might not even know about that they will have to pay more.

One of the two price hikes which Netflix made was in May 2014 where it raised the prices for the new customers for its standard streaming plan to $9.99 per month. Business Insider reported that the streaming subscribers were allowed to grandfather into the previous rates for the standard streaming plan of $7.99 per month. But starting May, those times will be long gone for the old customer base which was paying the old price from last price hike. Analysts believe that nearly 17 million US subscribers which are accountable to 37 percent of the total customer base in the US.

JP Morgan & Chase conducted a research which showed that about 80 percent of the streaming subscribers who will be affected by the price hike did not know it was coming at them all of a sudden. Irrespective of the bad news, most of the current subscribers will not cancel their subscriptions because of this. But according to the UBS estimates 4 percent of the subscribers that will be affected by this would cancel their subscriptions as soon as possible and the 41 percent claimed to cancel their memberships. The rest 15 percent said that they will think their subscription plan when it is done.

Regardless of the price hike, the streaming service provider believes that it can hold on to its streaming subscribers whatsoever. And one of the main reasons is its original movies and TV shows. An analyst at Wedbush, Michael Pachter, stated that the streaming giant will see a slight increase in its US customer base once the price hike is validated. On the other hand, he added that Amazon Prime Video would be looking to capitalize on every customer that Netflix will lose.

Pachter said, “Netflix countered the impact of higher pricing by releasing two high-profile originals (‘House of Cards’ and ‘Daredevil’) in March and by timing the release of the next season for ‘Orange Is the New Black’ (its most watched show, according to Survata) for June 17. It appears the company hopes to limit churn by timing heavily viewed releases at quarter end.”