Netflix Plans to Raise Streaming Prices for New Members

A blog about business and economics.
April 21 2014 5:12 PM

Netflix Adds Subscribers, Plans Price Increase

130723_$BOX_NetflixEarningsOrangeBlack
New Netflix subscribers will pay more to watch the next season of Orange Is the New Black.

Courtesy of Jessica Miglio/Netflix

Netflix climbed in after-hours trading Monday on better-than-expected earnings and news that the company had added 2.25 million domestic subscribers in the first quarter.

The movie and TV streaming service signed up 4 million new members in Q1 2014, representing strong growth in both the domestic and international segments. Earnings per share came in at $0.86, topping estimates for $0.83, on revenue of more than $1 billion. Netflix shares jumped nearly 7 percent to $372 after the bell, up from their Monday close of $348.49.

Advertisement

Netflix CEO Reed Hastings and CFO David Wells also dropped some big news about pricing in their letter to shareholders. The company plans to raise streaming prices by $1 to $2 for new members in different countries later this quarter. In the U.S., that could bring fees a high as $10 a month for the streaming plan.

Hastings and Wells emphasized that the price hike would only apply to new sign-ups while existing members would stay on their current pricing plans (i.e., $7.99 in the U.S.) for a “generous time period.” Netflix tested this approach in Ireland this January, asking new subscribers to pay €7.99 instead of €6.99, and grandfathering existing members into their pricing plans for two years. The company said it saw “limited impact” from the change.

The latest quarter was also strong internationally for Netflix, which noted its service is becoming “the first-run home for many great U.S. TV series” outside of North America. Netflix said its international segment is on track to become profitable this year.

It will be interesting to see whether the report is enough to turn Netflix around in the eyes of investors. Netflix has lost 4.7 percent since the start of the year and nearly 15 percent in the past month alone, as tech stocks have sold off broadly.

Alison Griswold is a Slate staff writer covering business and economics.

 

TODAY IN SLATE

Medical Examiner

The Most Terrifying Thing About Ebola 

The disease threatens humanity by preying on humanity.

I Bought the Huge iPhone. I’m Already Thinking of Returning It.

Scotland Is Just the Beginning. Expect More Political Earthquakes in Europe.

Students Aren’t Going to College Football Games as Much Anymore

And schools are getting worried.

Two Damn Good, Very Different Movies About Soldiers Returning From War

The XX Factor

Lifetime Didn’t Think the Steubenville Rape Case Was Dramatic Enough

So they added a little self-immolation.

Politics

Blacks Don’t Have a Corporal Punishment Problem

Americans do. But when blacks exhibit the same behaviors as others, it becomes part of a greater black pathology. 

Why a Sketch of Chelsea Manning Is Stirring Up Controversy

How Worried Should Poland, the Baltic States, and Georgia Be About a Russian Invasion?

Trending News Channel
Sept. 19 2014 1:11 PM Watch Flashes of Lightning Created in a Lab  
  News & Politics
Weigel
Sept. 20 2014 11:13 AM -30-
  Business
Business Insider
Sept. 20 2014 6:30 AM The Man Making Bill Gates Richer
  Life
Quora
Sept. 20 2014 7:27 AM How Do Plants Grow Aboard the International Space Station?
  Double X
The XX Factor
Sept. 19 2014 4:58 PM Steubenville Gets the Lifetime Treatment (And a Cheerleader Erupts Into Flames)
  Slate Plus
Slate Picks
Sept. 19 2014 12:00 PM What Happened at Slate This Week? The Slatest editor tells us to read well-informed skepticism, media criticism, and more.
  Arts
Brow Beat
Sept. 20 2014 3:21 PM “The More You Know (About Black People)” Uses Very Funny PSAs to Condemn Black Stereotypes
  Technology
Future Tense
Sept. 19 2014 6:31 PM The One Big Problem With the Enormous New iPhone
  Health & Science
Bad Astronomy
Sept. 20 2014 7:00 AM The Shaggy Sun
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.