Netflix Looks to Take a Bite out of Moochers
Netflix is testing out a subscription tier that charges new users $6.99 per month for a single-stream, standard definition stream - which means you may have to say goodbye to "sharing" accounts.
Netflix is testing out a subscription tier that charges new users $6.99-per-month for a single, standard definition stream — which means you might have to say goodbye to "sharing" accounts your friends and family.
Until now, the company's cheapest streaming-only offer was a $7.99-per-month plan which allowed users to watch (hours and hours and hours of) television and movies simultaneously, on two screens at once, in standard or high definition. Users could also opt for an $11.99-per-month plan, that permits users to watch on four screens at a time in standard or high def.
For now, the $6.99 plan is only available to new users, and a Netflix spokeswoman said that it could be phased out: "We always are testing new things and this is a test for a $6.99 single stream plan... Not all people will see this option and it may not be something we ever offer generally." The company rolled out the $11.99 plan earlier this year.
Netflix is known for its innovation and has (usually) been rewarded for mixing things up. The company nabbed an unprecedented (for an online TV distributor) Emmy for the delightfully dark House of Cards. It has won accolades for shows like Orange Is the New Black and the fourth season of Arrested Development, both touted as Netflix originals. Netflix is also changing the way we watch television — all their original shows were released as entire seasons and most of us watch them in bulk: binge-consuming commercial-free, buffer-free, and restriction-free entertainment.
Though Netflix has successfully carved out a niche in digital television distribution, it has experienced a few major hiccups along the way. In 2011, the company created Qwikster, a short-lived and ill-advised scheme to split its DVD delivery service from its streaming one, hiking up prices significantly for anyone who opted for both. Ultimately, Netflix dropped Qwikster after massive complaints, and offered a mea culpa for the initial decision.
Now, some analysts warn that, if adopted, Netflix's new pricing plan could be another mistake. Andy Fixmer at Bloomberg reports:
One possible risk for the company is that customers downgrade to the one-screen, $6.99-a-month option rather than pay for a higher level of service. “If $6.99 enables Netflix to reach more consumers than $7.99 that’s obviously positive but it’s hard to imagine the $1 being a major price inhibitor,” said Richard Greenfield, an analyst at BTIG LLC who has a neutral rating on the stock. “If consumers who would have taken the $7.99 plan now sign up at $6.99, that all comes out of their profit margin. This is not the next pricing move investors were expecting.”
On the other hand, it could bring in new customers and dump freeloaders who "borrow" logins from people they don't live with. Wedbush Securities analyst Michael Pachter told Bloomberg that, "I am sure that [Netflix has] the ability to monitor device use... I admire their resolve to try to combat piracy. This is an ingenious solution."
Other changes are afoot at Netflix. Some of the company's licensing deals are set to expire at midnight, which means movies like Being John Malkovich, Requiem for a Dream, Titanic, and others will be retired from the service in 2014. That gives you less than 15 hours for a final movie binge... preferably on someone else's account.