Netflix announced its year end and quarterly results yesterday, revealing that while it showed growth overall, it’s slowing in some markets.
Overall, the company added 5.59 million customers in the three months up to the start of 2016, making an overall subscriber base of 74.76 million members. Around 45 million of those are in the US, though the total growth there was in decline for the quarter, at least partially because of its own success at market penetration.
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While the record quarterly growth in subscribers (and resulting rising share price – up 124 percent in 12 months) give the company reason to cheer, the company’s most loyal subscribers in the US will get slapped with a price increase later this year.
Customers on ‘grandfathered’ plans (ie. people who signed up years ago before new pricing tiers were introduced) that cost $7.99 for HD streaming will be given the option to continue streaming in standard definition (SD) instead or to pay $9.99 per month to continue watching in HD.
Slowing growth when you approach market saturation is one thing, but squeezing your most loyal customers for more cash probably isn’t the best way to inspire loyalty, particularly not with well-funded rival Amazon’s streaming ambitions never too far away.
However, Netflix isn’t worried about users jumping ship, it says:
“Given these members have been with us at least 2 years, we expect only slightly elevated churn.”
We’ve asked the company if grandfathered users in other markets will also be subject to the price increase and will update when we hear back.
➤ Letter to shareholders [Netflix]