Netflix Tests Lower Pricing for Lower Quality Streams

Some customers will be able access a $6.99 plan for the company, which is discontinuing its poison pill defense

Last Updated: July 10, 2014 @ 7:36 PM

Netflix is experimenting with lower pricing for reduced quality.

The streaming giant is shaving a dollar off the price of subscriptions for some customers, in exchange for limiting the number of devices they use to access movies and shows. Instead of $7.99 to watch on two screens at a time in high definition, some subscribers have the option to pay $6.99 a month to watch them on a single device and in standard definition.

The experiment may be partly motivated to find a financial model that discourages password sharing. The deal is only available to some people. A Netflix spokesperson said that the pricing is just a test.

“We always are testing new things and this is a test for a $6,99 single stream plan,” the spokesperson wrote in an email. “Not all people will see this option and it may not be something we ever offer generally.”

Also read: Netflix Shareholder Rights Plan Designed to Stave Off Hostile Takeovers

Netflix has faced subscriber outrage in the past when it has toyed with different pricing. In 2011, a 60 percent price hike for a popular DVD plus streaming plan resulted in customer defections and a well-publicized hit to its stock.

On Monday, the company also revealed that it is ending its poison pill plan to discourage takeover attempts this week, roughly two years ahead of schedule.

Netflix  adopted a shareholder rights plan last year in an attempt to defend the company against takeover attempts by Carl Icahn, the activist investor who acquired a 10 percent stake in the company after its shares had fallen below $60. Shareholder rights plans are designed to make takeover attempts discouragingly expensive.

See video: Amazon and Hulu Are Copying Netflix — But Netflix Copied Hollywood

Thanks to the popularity of programs like “House of Cards” and “Orange Is the New Black,” the company’s stock price rebounded and in October, Icahn sold his 3 million shares for a profit of more than $800 million.

Netflix shares closed Monday down .14 percent at $366.99.


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