Had Netflix for more than 2 years? You’ll soon pay more for it.
If you’ve been a Netflix member since the streaming service released the second season of “House of Cards,” then your monthly payment will soon increase by $2 — if you want to keep watching in high definition that is.
That’s because when Netflix raised prices for new members in May 2014, its current members were grandfathered in, meaning they were guaranteed to keep their current price for two years.
Well, it’s almost two years later — and the fourth season of “House of Cards” has already premiered.
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In a January letter to shareholders, Netflix said it would be releasing, in the second and third quarters, a “substantial number” of its U.S. subscribers — estimated by analysts to be 17 million members — from price grandfathering on the high-definition plan. Those members will have the option of continuing at $7.99, but now on the standard-definition plan, or continuing on HD at $9.99 a month.
In an email, Netflix said its members in the United Kingdom will begin to be un-grandfathered later this month. Beginning in May, the company said, the price update is rolling out elsewhere based on member billing periods.
To check your billing period, log into Netflix and click on “Your Account,” which is a drop-down option below the user’s name. Once there, under plan details, it will say what date your plan price is guaranteed through.
Netflix said all affected members will be notified by email and within the service, so members have time to decide which plan works best for them.
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So, if you haven’t gotten an email yet, odds are one will be on the way soon.
But the key question is: How will subscribers react when they get the news?
In a March report, JPMorgan Chase analysts said a survey indicated 12 to 15 percent of the affected users may cancel their subscription, but cautioned much will depend on how Netflix communicates the increase to customers. The analysts noted they believe the increase will be rolled out gradually to minimize disruption.
In a report released Monday, UBS analysts estimated that roughly 17 million U.S. subscribers — about 37 percent of Netflix’s 45 million U.S. members — will be affected by the price increase. UBS expects 3 to 4 percent of them to cancel Netflix.
UBS anticipates low churn because the base of affected customers have been with Netflix for at least two years, meaning they’re loyal, and because the price increase and consequent total cost are relatively modest.
Another reason: Netflix is comparatively cheap to begin with.
According to UBS, the average cost of usage for Netflix is only 9 cents per hour of viewing. For a typical pay-TV expanded basic package, that figure is 30 cents, UBS said.
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