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article imageNetflix plans price hike for its subscriptions

By Eliana Robinson     Apr 22, 2014 in Business
Netflix surprised customers today with their the announcement of their decision to increase monthly plans by $1 to $2 in their shareholder newsletter.
Netflix is an Internet television provider that offers a DVD-by-mail service along with international and domestic streaming services. The company earns the majority of its revenue through its streaming services, which allow customers to view content via smart TVs, Blu-ray players, video game players, and numerous mobile devices.
This decision came after a similar rollout, in January, was implemented in Ireland with minimal impact. Like the program in Ireland, these changes would only effect new members – initially. But the company refuses to give any specific time frames, stating only that existing members would maintain their current rate “for a generous time period.”
The last time Netflix decided to make a major price change, it suffered a tremendous backlash. In July 2011, the company announced it was separating the DVD and streaming services, spinning off the DVD service into a new company named Qwikster, and raising the prices by $6.00 a months.
The stock fell from a high of $298.73, the day following the announcement, hitting a low of $63.86 per share on November 25, 2011, more than a month after CEO Reed Hastings scrapped these changes.
Netflix admits that it is risky to make sweeping changes based on the response of a small fraction of customers, with limited options. But things have changed since 2011 – the economy is showing solid gains with millions more employed and the entertainment behemoth known as Blockbuster is no more.
So, there is an opportunity for Netflix to make these changes work. Customers will have to wait and see – which now is going to cost them a little more.
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