The world's largest video streaming platform, Netflix, faces a possible "unexpected" loss of subscribers due to the price increase of your monthly rate.
Earlier this year, Netflix reminded its more veteran users that the right acquired by seniority and according to which they could maintain a fee of $ 7,99 for two years, would come to an end sometime in the second or third quarter of 2016.
Many subscribers don't like Netflix's price hike
In a recent letter to the company's investors, Netflix CEO Reed Hastings noted how unfortunate it is that a significant portion of its subscriber base reacts "unexpectedly" to this. imminent price increase.
The explanation does not convince
The loss of these rights acquired by the oldest subscribers of the platform implies that the monthly fee will increase to $ 9,99 per month, something that Netflix justifies with the growing investment in its own productions of great success and quality such as "Orange is the New Black", "House of Cards", "Daredevil", "Narcos" or one of its latest releases, "Stranger Things" , among others.
However, some of these series ("Orange is the New Black", "House of Cards") debuted in 2013, while the new fee of $ 9,99 per month for new subscribers started the year immediately after, in 2014. This fact partially doubts the arguments put forward by the company.
Now, those users who wish to do so have the possibility of keep a fee of $ 7,99 / month in exchange for giving up HD video streaming.
The situation has affected the value of the company and has pushed down the value of its securities. Netflix shares fell 15% before its results report for the second quarter was made public yesterday.
Unreached goals
In this report, Netflix indicated what its immediate expectations had been in terms of the number of subscribers. Specifically, he noted that expected to add around 532.000 new subscribers in the United States, and about 2,10 million globally throughout the second quarter of 2016. The reality, however, has not run from their side. Both estimates have been above reality Ultimately, the company added 160.000 new customers in the United States and 1,52 million abroad, leaving the total for the quarter at 1,7 million new users, almost a million less than expected.
According to Netflix, these figures respond to "press coverage in early April of our plan for long-time subscribers," said Reed Hastings, in a letter to investors.
A misperception?
Moreover, Hastings estimates that the casualties are due to a misperception by many subscribers. According to him, "some members perceive the news as a new imminent price increase", instead of seeing it as the end of a period of thanks and consideration towards the most loyal users.
As spring approached and therefore also the announced price increase, Google searches increased by users looking for information about the cost of subscription to Netflix. A fact that seems to be in line with the results of this quarter, says Hastings.
Despite the increase in programming on Netflix, "Whatever the price is for something, people don't like it going up," Hastings admitted. And this while affirming that new monthly price levels are 'working great' for new members.
Conclusion
Clearly Netflix prices can't be held forever. It is also true that users do not like price increases. But it is no less true that Netflix is investing heavily to bring us high-quality products in ever-increasing quantities. 7,99 or 9,99, in both cases, the price is, at least, adequate.
If you ask me what I prefer, I will obviously answer that I prefer to pay € 7,99 per month. But I won't unsubscribe if my fee goes up a couple of euros. At least I will not do it seeing the panorama of current competition in Spain.