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Netflix Sees Subscriptions Dip Amid Price Hike, Blames Press Coverage

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As it turns out, raising the price of something can have the effect of turning people off that product. So it went for Netflix, which said this week that it’s lost some customers after instituting planned price hikes that affected around 17 million customers.

On Monday, Netflix told investors that it added slightly less than 1.7 million new subscribers in the second quarter on a net basis, after projecting that it would hit 2.5 million subscribers, MarketWatch reports.

Those numbers include a mere 160,000 new subscribers in the U.S., which is the lowest amount of customers it’s added in a quarter since 2012, MarketWatch notes. International growth was also paltry, with just 1.53 million globally, the smallest growth in that category since 2014.

Again, this doesn’t seem that surprising in light of the fact that Netflix announced in April that price increases of about $2 a month would start rolling out in May. The rate hike was expected, as Netflix had announced the eventual increases in May 2014. At that time, Netflix told customers that they’d be releasing members from price grandfathering for the Standard plan in two years, and reminded investors of the coming change in January of 2016.

Netflix did say that customers who heard in April that the price hike was about to hit had started canceling subscriptions, leading to unexpected “churn,” but did not admit that the price increase is what led to higher churn.

Instead, it pointed to “press coverage” of the anticipated price hikes, and that customers misunderstood “the news as an impending new price increase rather than the completion of two years of grandfathering.”

Netflix price increases causing subscribers to sign off [MarketWatch]


by Mary Beth Quirk via Consumerist

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