Netflix, Inc. (NFLX) Tests New Subscription Fees Based On Account Users

Updated on

Netflix, Inc. (NASDAQ:NFLX), the largest online video streaming company, is experimenting with new subscription fees based on the number of users of an account. Currently, subscribers are paying $7.99 per month for the video streaming service, and $7.99 for the DVD by mail service (one disc at a time).

Yesterday, Jonathan Friedman, spokesperson for Netflix, Inc. (NASDAQ:NFLX) commented that the company is always testing different options to improve its offerings to customers. He said, “We test all the time in an effort to come up with better options for consumers. There are numerous tests at any given time.”

New subscription plans

Netflix, Inc. (NASDAQ:NFLX) posted on its website that its monthly subscription fees range from $6.99 to $11.99 for new customers. The new subscription plans allows customers to stream different shows at a time (as many as four screens). The online video streaming company is trying to limit the sharing of account while providing customers different ways to watch their favorite programs or movies.

Commenting on Netflix, Inc. (NASDAQ:NFLX)’s latest effort, Michael Pachter, analyst at Wedbush Securities said, “I am sure that they have the ability to monitor device use. I admire their resolve to try to combat piracy. This is an ingenious solution.”

Pricing move might not live up to investors’ expectations

On the other hand,  BTIG analyst, Richard Greenfield opined, “If $6.99 enables Netflix to reach more consumers than $7.99 that’s obviously positive but it’s hard to imagine the $1 being a major price inhibitor. If consumers who would have taken the $7.99 plan now sign up at $6.99, that all comes out of their profit margin. This is not the next pricing move investors were expecting.”

Last April, Reed Hstings chairman and CEO of Netflix, Inc. (NASDAQ:NFLX) revealed the company’s plan to offer an $11.99 monthly subscription fee. Back then,  Hastings expected that less than 1% of its customers might decide to upgrade their existing plans.

Meanwhile, Netflix, Inc. (NASDAQ:NFLX) announced the termination of its stockholders rights plan effective yesterday, December 30. The company adopted the stockholders rights plan or poison pill in November last year to prevent any take over plan particularly from activist investor, Carl Icahn.

The company said it would be “taking routine actions to voluntarily deregister the related preferred share purchase rights under that Securities Exchange Act of 1934, and to delist the preferred share purchase rights from NASDAQ.” The actions of the company have no effect on its common stock.

Leave a Comment