Business

Netflix to phase out $7.99 HD plan for long-term members starting in May

The days of getting high-definition streaming via a Netflix account that you can share with a friend for less than $8 a month are coming to an end, the company says.
Netflix has moved to a new tiered pricing plan, after a blanket $7.99 for everyone policy since launch. (Mike Blake/Reuters)

The days of getting high-definition streaming via a Netflix account that you can share with a friend for less than $8 a month are coming to an end, the company says.

As part of pricing plans first announced two years ago, the streaming video company is moving ahead to offer higher-tiered pricing for its service, the basic option of which has cost $7.99 a month since launching.

In May 2014, Netflix hiked its base plan to $8.99 a month for new members. For that price, they got the ability to stream on two devices at once, in high-definition quality. Then last October, more pricing tiers and options rolled out, adding a higher-end plan at $11.99 a month that offers high-definition streaming on four devices at once, while original Netflix customers still paid $7.99 for the most basic version.

Starting next month, however, that two-year grandfathering period is over, and the old $7.99 plan won't be available any more.

"Netflix will be releasing a number of our members from price grandfathering on the HD plan and they will have the option of continuing at $7.99 but now on the SD plan, or continuing on HD at $9.99 a month," a spokesperson told CBC News in an emailed query response.

Consumer choice

The company makes it clear that anyone impacted will be contacted by the company, and the choice will be on the consumer to make — not imposed by the company — as to whether they want to stay at that price point and get standard definition on only one device, or upgrade to a pricier plan with more options and better quality.

"Impacted members will be clearly notified by email and within the service, so that they have time to decide which plan/price point works best for them," the spokesperson said.

The same round of price hikes will hit anyone who signed up for the $8.99 plan in October, once their one-year grace period expires.

Other countries will follow, with U.K. customers being "ungrandfathered" from the launch-date base price soon.

The company has seen this coming for a while, and may have to deal with customers upset with higher prices. But in a January letter to shareholders, company management made it clear they don't expect to lose a lot of business as a result.

"Given these members have been with us at least two years, we expect only slightly elevated churn," the company said at the time.

Others aren't so sure that's true.

Investment firm Pivotal Research said in a note this week it thinks the price changes could affect about 17 million people. Almost half a million of them, Pivotal predicted, will likely cancel their accounts as a result of the price hike. And another 10 per cent — 1.7 million customers — will likely decide to switch to the cheaper option.

"Consumers could bounce back and forth between alternative [streaming services]," Pivotal said.

About the Author

Pete Evans

Senior Writer, CBCNews.ca

Pete Evans is the senior business writer for CBCNews.ca. Prior to coming to the CBC, he had stints at Report on Business, the Financial Post, the Toronto Star, Canadian Business Magazine and elsewhere. Twitter: @p_evans Email: pete.evans@cbc.ca Secure PGP: https://secure.cbc.ca/public-key/Pete-Evans-pub.asc

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