The recent Netflix pricing changes may not have gone down too well with subscribers but only now could we be seeing the uglier ramifications.
The company experienced a substantial slowing of growth last quarter, adding just 1.68 million subscribers rather than the 2.5 million it had anticipated. As expected, the news did not go too well among investors, taking the stock price down 15 percent to $84.
The company had recently undertaken its second price hike in as many years, last being 2015, though it delayed the rolling out of those changes to longtime consumers until this summer. The changes, which could have varied between $1 and $2, are now being applied resulting in some of its user-base as users flock away. Netflix assumes at least some of the users thought of it as an upcoming price hike, rather than as two years of “grandfathering”.
Netflix won’t take a knee-jerk and is standing by its practices, saying the price changes will allow it to target long-term by investing in more content to satiate users. Its future plans include more local programming for new markets like India, and Brazil.
The company had previously added 17 million users in 2015 and 13 million in the year before, though, it isn’t expecting quite the same growth this year. Still, with half the year remaining, it could add more new users especially as it expands in markets, on the back of more exclusive content.