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Netflix is raising prices for new members

Netflix is raising prices for new members

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Netflix is about to get more expensive, but only by a dollar or two. In his company's Q1 letter to shareholders, CEO Reed Hastings said, "Our current view is to do a one or two dollar increase, depending on the country, later this quarter for new members only." Hastings then noted that existing customers will be able to stay at current monthly rates (e.g. $7.99 in the US) for a "generous" period of time. "I don’t think it’s a huge difference," he said of the price change during Netflix's afternoon earnings call.

"We want to get this done well, and make sure we grandfather people cleanly," said Hastings. That decision to grandfather current rates means the higher pricing won't have a huge influence on Netflix's bottom line for some time. Hastings said it will be "quite modest in the short term." Netflix may also experiment with new tiers beyond the core price bump, according to Hastings. "We're continuing to look at that," he said.

The company says it experienced only "limited impact" after hiking prices for new members by €1 in Ireland. In that case, Netflix promised current customers that they'd be grandfathered into the cheaper plan for two years. But it might not stretch so long in the US. "We’ll do between a year or two," Hastings said, revealing that Netflix will reveal more specifics at a later date. Raising the monthly subscription fee will help Netflix "acquire more content and deliver an even better streaming experience," Hastings said. An $8.99 or $9.99 price would make Netflix more expensive than Hulu Plus — which costs $7.99 per month — but Hulu still annoys its paying customers with advertisements.

Update: The article has been updated with some of Reed Hastings' remarks from the quarterly earnings call.