Netflix Plans To Raise Prices By "$1 or $2 a Month"

New submitter Burphytez (3625571) writes with this excerpt of a Reuters story, as carried by the Chicago Tribune: "Video streaming service Netflix Inc said it intends to raise the monthly subscription price for new customers by $1 or $2 a month to help the company buy more movies and TV shows and improve service for its 48 million global subscribers. Investors welcomed the announcement by Netflix, which had suffered from a consumer exodus and stock plunge after it announced an unpopular price increase in July 2011. The company's shares jumped 6.7 percent in after-hours trading to $371.97, after the company released plans for a price hike and posted a rise in first-quarter profit that beat Wall Street expectations."

Comments

Milk that cow!

[B33rNinj4]

I guess they found a way to cover the costs of their deal with Comcast.

Re:Milk that cow!

[Mashiki]

Doesn't really matter anyway, even at raising the rates for new customers by $1-2, it's still got more value than cable or sattelite TV by leaps and bounds. That's pretty scary isn't it? Especially with all of the crap programming and reality TV garbage that they have on these days. I sadly remember when things like History, NatGO, Discovery and TLC had something worthwhile on them. The last time I watched them when I was in the US(last year) it was wall-to-wall reality TV programming. Good riddance to them.

Re:Milk that cow!

[alen]

more like the content costs

if you look at their financials 3/4 of revenues goes to pay for content. networking costs are maybe 1/10 of revenues

Re:Milk that cow!

[SJHillman]

The really curious part is the fact that Netflix is so much cheaper than cable *in spite of not having commercials*. The fact that you pay for cable TV only to be bombarded with commercials is a slap in the face that most people are too willing to accept.

Re:Milk that cow!

[jeffmflanagan]

The media reports on the deal with Comcast turned out to be complete bullshit.
A friend did some research on this:


There are three companies involved:
Netflix (Content provider)
Cogent (Transit provider)
Comcast (Internet service provider)


It was Cogent, not Comcast that was the bottle neck.

Here’s how the industry works. These companies negotiate with each other to use each other’s services.

So, Netflix agrees to pay A for Cogent to provide B amount of bandwidth. Cogent agrees to pay C to Comcast for D amount of bandwidth.

What happened is that Cogent ran out of bandwidth. Under normal industry standards, Cogent is expected to pay E for F additional bandwidth. In what appears to be some pretty underhanded and sneaky business practices, Cogent demanded that Comcast provide the additional bandwidth for free and tried to make it look like it was Comcast’s fault.

Basically, Cogent was getting money from Netflix to provide a service that it couldn’t provide.

The Comcast-Netflix deal is basically, that Netflix decided to replace Cogent and hire a new vendor. Comcast is a large company and offers multiple services. Netflix could have gone with any vendor they wanted. They choose to go with Comcast apparently because Comcast was offering them a better deal than anyone else. I don’t know if that means they are charging less than Cogent or perhaps there’s some technical advantage (such as better performance or more reliability) with hiring the same vendor for two different services.

So, the reason why Netflix is paying Comcast is because Comcast is now providing a new service (transit provider).

Also, this money is not a brand new fee that Netflix has to pay someone. This is the money (A) that they were going to give to Cogent.

Again, Netflix could have used any transit provider they wanted. They choose Comcast because apparently, they offered the best deal.

Re:Milk that cow!

[cpotoso]

What are you smoking?? WE pay for the internet service (monthly bill, anyone?). So why should Netflix have to pay on top of that?? The infrastructure? Yes, coming from your monthly bill. Duh!

Fine logic

[LookIntoTheFuture]

Investors welcomed the announcement by Netflix, which had suffered from a consumer exodus and stock plunge after it announced an unpopular price increase in July 2011.

Well, the first price increase cost us customers so the stock plunged. What will make the stock soar? A price increase!

Re:Not Necessarily A Bad Thing

[The Grim Reefer]

While as a consumer I'll bemoan paying more, the reality is, to deliver quality content they need to find the price sweet spot. It's still way below the cost of cable TV, so I don't think it will hurt them in the long run.

Yes, it seems like it will mainly benefit shareholders, but with the lack of ads and low price, even after the increase, who can really complain?

From TFS, "Netflix Inc said it intends to raise the monthly subscription price for new customers by $1 or $2 a month..."

Unless my reading comprehension is on the blink, as a current customer, you shouldn't see a rate increase. Yet.

FIFY

[140Mandak262Jamuna]

"Video streaming service Netflix Inc said it intends to raise the monthly subscription price for new customers by $1 or $2 a month to help the company pay ransom to the ISP monopolies with stranglehold on the last mile of cable built by the rate payers over theyear on public rights of way, protected by the public utilities commissions, who wantonly flout truth-in-labeling laws by selling X Mbps service and balk at providing it.

FIFY

Re:....profit

[wonkey_monkey]

2. Announce forthcoming price rise applicable to new customers as of a future date
3. Watch those people who were previously on the fence about it sign up to avoid the price hike
4. ???? ...and so on.

Re:New Customers

[SJHillman]

I wonder how many current customers will quit over this, then realize two months later it was only for new customers. And then have to sign back up at the higher rate.

Re:Not Necessarily A Bad Thing

[Talderas]

Yep. Their goal is to encourage long term subscriptions and not binge subscribing. They have a "problem" where people will subscribe for one to two month, binge watch content, and then unsubscribe for about six to eight months.