To the surprise of virtually no one, Netflix is raising prices. And soon – within the next few months in some places, according to financial results released by the company on Monday:
Our current view is to do a one or two dollar increase, depending on the country, later this quarter for new members only. Existing members would stay at current pricing (e.g. $7.99 in the U.S.) for a generous time period. These changes will enable us to acquire more content and deliver an even better streaming experience.
That “generous time period” could be two years, if the Irish experience is anything to go by. Netflix raised its subscription price in Ireland by one euro to €7.99 in January, which resulted in “limited impact.”
While few observers believed such low subscription costs could be sustained for long, Netflix does have to tread carefully. The streaming service straddles a fine line between expensive cable TV services at one end and free file-sharing at the other. It’s only been a few short years since the company emerged as Hollywood’s antidote to that perceived scourge. Over that time, it has converted more than 35 million potential file sharers into customers who are at least paying something for some of the shows and movies they watch. While file-sharing used to account for the largest share of Internet traffic, it’s now Netflix that accounts for about a third of all bandwidth usage.