Netflix has revealed that the price change in US subscriptions affected membership growth in the region in its latest stakeholder report for Q3 2019.
The report, which also mentioned factors such as the impact of ‘streaming wars’ from upcoming new services and new subscriber results for the latest quarter, discussed how the change in pricing for 2019 billing cycles led to a negative impact on retention.
In the report, Netflix says: ‘Since our US price increase earlier this year, retention has not yet fully returned on a sustained basis to pre-price-change levels, which has led to slower US membership growth.’
However, the company was quick to cushion this blow by saying that revenue growth had been ‘accelerating, as US ARPU increased 16.5% year over year in Q3.’
May 2019 saw higher pricing affect US Netflix customers, which was the company’s biggest price increase in its history. New subscribers were required to follow the new pricing plans immediately, with existing customers being gradually moved to the new setup.
The price hike saw the Standard plan, with two HD streams, go up from $10.99 a month to $12.99. The Premium plan, which features up to four Ultra HD streams, went up to $15.99 a month from $13.99, and the Basic plan, which offers one non-HD stream, went from $7.99 to $8.99 a month.
While Netflix, who announced the price increase in January 2019, said the decision had been made so the company could ‘continue investing in great entertainment and improving the overall Netflix experience’, its stock took a hit when Apple TV+ revealed its subscription pricing of just $5 a month with a seven day free trial, hinting that competitors could have an edge if subscribers are easily swayed by pricing.
You can read the full stakeholder letter for Q3 2019 here.
