Netflix revealed yesterday that it added a net of 1.96 million subscribers in the United States in the first quarter and the better-than-expected results appears to have company executives thinking about a price increase.
Wall Street analyst Benjamin Swinburne yesterday asked Netflix CEO Reed Hastings about future pricing plans in a YouTube chat held after the release of the first quarter earnings statement.
Hastings did not commit to a price increase in the chat. But he did suggest one would be justified if it continues to add subscribers, which it has forecast it will.
“It really depends on the offering…the quality of our offering relative to others,” Hastings said. “So you have to earn it first by doing spectacular content that everybody wants to see. But if you do that, you can get people to pay a little bit more because then we’re able to invest more and further improve.”
Netflix last raised prices just six months ago. The home video service bumped the cost of its High-Definition plan with two streams from $9.99 a month to $10.99 a month. In addition, Netflix raised the price of its four-stream 4K plan from $11.99 a month to $13.99 a month.
With competition in the streaming category increasing rapidly, you might think that Netflix would be cautious about publicly discussing another price increase so soon after the one last October.
However, the company’s remarkable capacity to add subscribers despite greater investment in content from rivals Hulu and Amazon Prime seems to have embolden Hastings and his fellow executives.
Hastings told Swinburne that Netflix will base any price increase on whether more consumers are subscribing and if they are watching more programming.
“We always approach it on a have we earned more viewing from people basis first rather than a price-first basis,” Hastings said.
Netflix now has more than 125 million subscribers worldwide, which includes nearly 57 million in the United States.
— Phillip Swann