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Netflix Plans to Raise Subscription Prices
April 22, 2014
Amanda Marie
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On Monday, in a Shareholders Letter published by Netflix executives CEO Reed Hastings and CFO David Wells, it was all about their financial forecast, and their financial performance outlined on their financial statement for the first quarter of 2014, in comparison to results from 2013.

In January, Netflix increased their prices for subscriptions in Ireland. At that time, existing members were allowed to continue their current subscriptions at the old rate of €6.99 per month for two additional years. All new members that signed up had to subscribe at €7.99 per month. Per the letter today, Netflix stated they had seen little impact as a result of that increase. Based on that, they stated, “In the U.S. we have greatly improved our content selection since we introduced our streaming plan in 2010 at $7.99 per month. Our current view is to do a one or two dollar increase, depending on the country, later this quarter, for new members only.” In bold characters, the letter goes on to say, ”Existing members would stay at current pricing (e.g. $7.99 in the U.S.) for a generous time period.” Netflix feels that those changes will enable them to, “acquire more content and deliver an even better streaming experience.”

According to them, their long-term ISP performance showed both positive data, and surprising data, especially in the U.S. They mention that “Comcast is providing a much improved Netflix experience to their subscribers”. Their surprising news is that AT&T fiber-based U-verse has lower performance than many DSL ISPs, including Frontier, CenturyLink and Windstream. Netflix feels that “connectivity to the broader Internet is critical to the quality of experience customers receive.”

Netflix is strongly against the Comcast-Time Warner merger, stating "the combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers."

Netflix says that they topped $1 billion in streaming revenue for the 1st quarter of 2014, attributing some of that to the success of House of Cards, season 2. Their complete summary results as well as their forecast for the 2nd quarter of 2014 are outlined in the letter.

Netflix concludes the letter by saying that they are almost up to 50 million global members, but that there is still a gap between that, and the 130 million members subscribing to HBO, and that they are very eager to close that gap.

So what does everyone think, is one or two dollars an affordable and reasonable increase to pay for a Netflix subscription?

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