Millions of Netflix users were hit with a price hike in May, and a total of 27 million people will face the higher monthly fee by the end of the year. Not surprisingly, many members won’t want to pay the new price. In fact, some 480,000 subscribers may cancel their service as a result, says Nomura Securities analyst Anthony DiClemente in a new research note, according to Variety.
Those affected by the increase are users on the two-stream HD plan, which has been raised from $9 to $10 a month. That extra dollar a month is being used to offset the cost of adding new movies and TV series to the streamer’s catalog, Netflix previously explained. However, for some users, the reason won’t matter as much as the cost.
Netflix has been forthcoming with investors about the possibility of losing subscribers due to the price increase, telling them it expects “modestly increased churn.” Nonetheless, the company has reason to believe that revenue generated by the change will have a net positive affect. After all, 480,000 users is small percentage of Netflix’s growing user base, which has surpassed 80 million subscribers.
While Q2 numbers haven’t been released, Netflix previously announced that it expected to add 500,000 U.S. subscribers during that period, as well as to grow by 2 million international members. Beyond that, DiClemente estimates that Netflix will net 2.35 million international subscribers during Q3, and 3.23 million in Q4. The numbers will be more than enough to make up for the roughly half million it may lose as a result of the price hike.
The service is reaching saturation in the U.S. market, which often leads to increased prices. “We note that this has long been a tenet of our investment thesis on the domestic business, as slowing subscriber trends are more than offset by increased monetization,” DiClemente wrote.
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