Netflix to Test Fees Predicated on Number of Users

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Netflix Inc., the largest subscription service for streaming video, has started testing new prices based upon the number people who are able to use the account. This is a move that could force Netflix customers to pay more monthly subscription fees for additional members of the family.

The streaming video company is offering some of its new customers, plans providing access on up to four screens, allowing household members to watch up to four different shows simultaneously. The prices monthly for the new plans range from a low of $6.99 to as much as $11.99.

If the move is successful, the new plans could then be expanded to additional customers. This current tests suggest that Netflix, with over 40 million subscribers, is attempting to find ways to curb account holders from sharing, while providing their viewers additional ways to watch. This is similar to how cable TV suppliers rent subscribers additional boxes for different televisions.

The standard streaming service for Netflix is $7.99 per month per the company website. The mail subscription for DVD are the same price but for only one disc per mailing.

Reed Hastings, the CEO and Chairman at Netflix, said in April the company would be offering the service at $11.99 per month, but thought at that time, less than 1% of its customers would make the upgrade.

This year Netflix is the S&P 500 Index’s top performing stock that has nearly quadrupled as earnings estimates were beaten by the company and it outpaced the estimates of analysts for growth in subscribers. The stock dropped by 0.1% on Monday, to close at $366.99.

One risk the company could possibly have is customers might downgrade to the $6.99 option, which is just for one-screen, instead of paying for an upgrade service.

However, one analyst said that if the monthly rate of $6.99 helps Netflix reach more subscribers than the current $7.99 then it would obviously be positive, but it is difficult to imagine only $1 being a price inhibitor.

Netflix also said its anti-takeover poison pill defense was being terminated as of Monday nearly two years prior to schedule. Investors do not have to take any action due to this change, said a statement released by the company.

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