Netflix’s stock price surged increased by 7% on Tuesday after the company announced that it added more subscribers last quarter than it expected to, and raked in $1.823 billion in revenue. However, a measly $43 million of that revenue was actually profit, because the company spends ridiculous amounts of money on content, and that’s why some subscribers are going to have to start paying more soon. Users who have been with the company for a long time were able to keep the $7.99/month price tag for Netflix’s high-definition streaming option, even after the price was bumped up to $9.99/month for new subscribers, but soon they’ll have to start paying the full price.
A handful of Netflix users are about to see their monthly bills go up. Longtime Netflix users have enjoyed full high-definition streaming for $7.99 a month, grandfathered in on a plan that’s cheaper than what’s currently available to new subscribers. But all good things must come to an end. The company reiterated in a note to shareholders Tuesday that those lower-paying users will soon face a choice: Keep paying $7.99 a month but get downgraded to standard-definition streaming only, or fork over the $9.99 a month that new customers pay and get full high-definition content. That doesn’t sound like much, but it’s the difference between about $96 a year and about $120 a year. That’s a difference that could change the streaming calculation for some. Still, Netflix has given customers plenty of reason to stick around — namely, top-notch shows that aren’t available anywhere else, like House of Cards and Jessica Jones. Indeed, Netflix is confident that it won’t lose subscribers over the price hike, which it’s been public about for months. “Given these members have been with us at least two years, we expect only slightly elevated churn,” reads the company’s shareholder letter. It isn’t clear exactly how many Netflix users are currently on the $7.99 a month grandfathered plan.
