If you’ve been a longtime Netflix customer, watch out for a 25 percent hike in your bill soon.
Two years ago in May, the popular streaming-video service boosted its rates by a dollar, followed by another dollar hike in April of last year, lifting the cost of its most popular level of service in the U.S., Canada and Latin America.
Previously, when Netflix boosted prices in 2011, members rebelled and fled in droves — 800,000 cancelled. So to smooth things over with its most recent hikes, Netflix decided to “grandfather” people who were already subscribers before the hikes where announced. If you subscribed before the price increase, your rate would stay the same for two years.
And starting next month, that grace period is going to run out.
That means longtime subscribers with a standard plan — the company’s most popular tier, which lets two people watch separately at the same time — who were paying a $7.99 monthly fee are about to see the cost jump to $9.99.
Analysts at UBS estimated that 17 million people will be affected by the hike, according to a note this week.
But working in Netflix’s favor is a phenomenon that actually hurt the company last year: subscriber cluelessness. Yup, most people are likely to keep paying when the rate moves higher because they sign up their credit card to automatically pay Netflix and then forget about it.
That pattern hurt Netflix last year, when credit and debit card companies switched U.S. customers to new cards with built-in chips. The transition meant that lots of consumers’ card numbers changed, and many never bothered to update their Netflix accounts to continue automatic payments with the new cards.
Netflix was hit with a wave of what it called “involuntary churn” — people who unwittingly stopped paying Netflix simply because their cards didn’t work anymore.
This time, the people who will be caught unawares aren’t going to be saving some cash by accident — they’ll be coughing up $2 more.
In fact, UBS researchers believe only about 3 to 4 percent of the members affected by next month’s boost will bother to cancel because of it. That’s as many as 680,000 “House of Cards” bingers.
But it means that more than 16 million of you will be paying a little bit extra to be binge the new season of “Orange Is the New Black” when it hits in June.