It's official: Over 22 million US Netflix subscribers will get a price hike in the coming months

Reed Hastings at DealBookYouTube ScreengrabNetflix CEO Reed Hastings

More than 22 million US Netflix subscribers will see a price increase in the coming months, the company revealed in a letter to investors on Monday.

In May 2014, Netflix began to raise the price of its standard streaming plan for new US subscribers, first to $8.99 a month, then to $9.99 a month last October. But if you were an existing subscriber before each of the two price increases, Netflix grandfathered in your plan at the same rate.

That means that many Netflix subscribers are still paying either $7.99 or $8.99 for a plan that normally costs $9.99.

But that grandfathering will cease over the course of the next few months. “We will phase out this grandfathering gradually over the remainder of 2016, with our longest­ tenured members getting the longest benefit,” Netflix wrote. This process with start in May, but happen “slowly,” with all affected members being notified by email.

Netflix said that grandfathered accounts represent “more than half” of its US subscribers. Netflix’s latest US subscriber count, provided on Monday, was 45.71 million, meaning at least 22 million will be affected by these price changes.

How many will cancel? Netflix’s take: “We expect only modestly increased churn from un­grandfathering, partially because these members have been with us for a reasonable period already, and because our content continues to improve.”

Analysts at UBS estimate that roughly 3% to 4% of affected subscribers will cancel, though many more say they will.

Most grandfathered accounts are in the US, but Netflix says it will have roughly the same strategy for international grandfathered accounts.

NOW WATCH: Why Sean Parker’s plan to stream movies still in theatres for $50 could work

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.

Tagged In

netflix sai-us thewire