Study says Netflix could lose half a million customers due to this one decision
As of last month, the great Netflix price bump officially began, with the first wave of about 27M subscribers being subject to a $2 per month price increase.
The two-stream HD plan subscribers that haven't yet been affected will be this fall.
The price increase will change existing subscribers' monthly fees from $7.99 to $9.99, with the option to downgrade to a single-stream SD plan for the same $7.99 price.
Additionally, due to a grandfathering system, those who signed up for the HD plan after May 2014 (when the price was increased from $7.99 to $8.99) will only see a $1 increase to even out their subscription fee with the others.
Though $1 or $2 may seem small, to many users in the grand scheme of things, it isn't.
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Perhaps it's a matter of principle or an actual issue with affordability, but analysts at Nomura Securities are estimating that the seemingly minor jack up in subscriptions fees is going to cost the streaming company an alarming number of subscribers.
Based on an estimated 2 percent churn rate for Netflix members who saw a $2 monthly increase and a 1 percent churn rate for customers whose subscriptions will increase by $1 monthly, analysts are predicting that upwards of 480K customers will cancel their Netflix subscriptions.
Netflix CEO Reed Hastings explained the process:
"We will phase out this grandfathering gradually over the remainder of 2016, with our longest-tenured members getting the longest benefit. We are rolling this out slowly over the year, rather than mostly in May, so we can learn as we go."
However, though the company may be losing valuable subscribers, it looks like their revenue isn't slated to suffer.
Even if this estimated number of subscribers actually do cancel, Netflix would still be looking at $520M in annual revenue.
You win some, you lose some.
Or in Netflix's case, you lose some, you still make millions.
Now, take a look at Netflix throughout its history: