NEW YORK (TheStreet) -- Netflix (NFLX) reported first-quarter results and announced a price hike for new customers, noting existing customers will keep their current pricing "for a generous time period." Will new customers shun the streaming service?
Concerning the price increase, CEO Reed Hastings said there will be an increase for new members of $1 or $2, depending on the country. "Existing members would stay at current pricing (e.g. $7.99 in the U.S.) for a generous time period," Hastings noted. "These changes will enable us to acquire more content and deliver an even better streaming experience." On the call, Netflix said that most of the increase in revenue from the price increases would go towards spending on original content. The revenue increase in the short-term would be "modest." Netflix did not say when the price increase would go into effect.
Though Hastings didn't quantify when existing members would see the price bump, JPMorgan analyst Doug Anmuth, who helped moderate the call, noted it would be "likely two years in the U.S."As the company continues to do more original programming, Netflix is reinvesting the proceeds from the price hike towards content. On the conference call, Chief Content Officer Ted Sarandos noted that Orange Is the New Black, a Netflix original, is the company's most watched show. The popular political thriller House of Cards helped drive subscriber growth during the quarter, with Sarandos noting, "We saw a lot of very early front weighted viewing for the launch, which kind of told us that America was ready for more and dug in right away. And as we mentioned in the letter, we have been actually thrilled so far with the show from the early launch relative to how you would measure television on any show on basic cable or premium cable, and I only give you that information, by the way, to help you understand the class of viewing to think about a show like House of Cards." On the conference call, Hastings continued to reiterate that Netflix's total addressable market in the U.S. is between 60 million and 90 million households, but throughout the world, it's "everyone who loves TV and has the Internet." TheStreet has set up a poll asking if readers would pay more for Netflix. Results of the poll will be up in a few days.
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