Existing Customers To Stay at Current Prices For "Generous Time Period"

Netflix released their Q1 earnings after the closing bell earlier today.

The streaming video company, which is responsible for hits such as "House of Cards" and "Orange is the New Black", finished Q1 with a total of 48.35 million global streaming members, 46.14 million of which are paying members. Netflix reported a total of 4 million net additions in Q1, 2.25 million of which were from the United States.

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Netflix members who are reading this article will be interested to know that the company is planning a price increase in all of the countries in which they operate. This increase will immediately impact new members (the increase is expected later in the quarter), while existing members would be grandfathered at existing prices for a "generous time period". Netflix recently raised prices for their Irish members - existing members were grandfathered for a period of two years, and I would expect something similar in the United States.

According to Netflix, prices will be rising by $1/$2 per month, depending on the country. My guess is that Netflix elects to raise prices in the United States by $1/month later in the quarter, with existing members being eligible for the current rate ($7.99/month) for a period of two years.

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In their letter to shareholders, Netflix management said that the price increase is necessary to "acquire more content" and "deliver an even better streaming experience."

Analysts are likely to cheer the move as it is widely thought that Netflix has plenty of room to raise prices.

Shares of Netflix were up about 7% in after-hours trading.

Filed under: General Market News