Netflix, Inc. (NASDAQ:NFLX) increased its price by $1 at the end of the second-quarter, and as a result, saw lower domestic subscriber growth. However, the online video streaming company is confident in its ability to get more subscriptions even after the price hike, according to CFO David Wells, who spoke to an investor group recently.
Netflix does not rule out further price hike
Wells, while speaking at RBC Capital Markets 2014 Technology, Internet, Media and Telecommunications confab in New York on Nov. 11, noted that there are doubts over the price increase after subscriber growth did not come in very strong in the most recent quarter. Netflix raised the $7.99 monthly fee to $8.99 at the end of the second-quarter.
Back in 2011, when the online video service raised its price, it was shaken after as many as 800,000 subscribers dropped the service, and the company shares dropped 75% due in part to a 60% price increase plan. Wells hinted that the price could be moved up every two years or so, adding that the company is concerned about increasing the value of Netflix. He said that that global pricing cannot be uniform. However, the company is planning to increase value with the help of the current pricing tiers, and is not estimating any price increase in geographies outside the United States.
Wells accepted that in the short-term, a rise in price somewhat effects the user growth, but for the long-term “We haven’t confirmed” the issue, adding, “I think we still have pricing power.”
More expansion planned for 2015
According to Wells, Netflix, Inc. (NASDAQ:NFLX) is focusing on luring 10% of the 500 million to 600 million “addressable” broadband households other than the United States. The company is looking forward to earning around 50% of its revenue outside the United States.
Additionally, the company is planning to expand in six or more new countries in 2015. Wells did not say anything about the countries, regions or possible launch dates. However, he did say that next year there will be a significant expansion similar to this year or even greater.
Wells also mentioned that even though subscriber growth was low, and analysts are cautious, Netflix is determined to hit its previous projections of 60 million to 90 million broadband household subscribers in the United States.