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Netflix CFO Eyes Price Hikes Reflecting Enhanced Consumer Value

6 Jan, 2016 By: Erik Gruenwedel

Netflix CFO David Wells

On the heels of just-announced expansion into 130 additional countries — about a quarter of global broadband households — Netflix plans to re-evaluate existing subscription pricing — including possible price hikes going forward, CFO David Wells told an investor group.

Speaking Jan. 6 at the Citi 2016 Internet, Media & Telecommunications Confab in Las Vegas, Wells said higher and/or lower pricing, including local currencies and payment periods, would be introduced depending on market conditions going forward.

“We’re not talking about lower pricing yet in these markets. We could get there, but today, we’re talking about comparable pricing. We have the opportunity to use our [pricing] tiers … to explore lower- or higher-breadth pricing,” Wells said.

The CFO said Netflix aims to drive enhanced consumer value in content offerings underscored by gradual price hikes. The company ended Q3 with more than $10 billion in third-party content rights obligations. Indeed, millions of U.S. subs will see their existing $7.99 monthly plan transitioned to $8.99 in the second quarter in line with previously announced price grandfathering.

Wells said sub fees going forward would be dependent upon on the number of people accessing an account. With mobile access key to international markets void of traditional broadband networks, that access could be more important to altered pricing going forward. 

“There is a potential there that we could look at some [pricing] variance. We’re really early days there,” Wells said.

Separately, the executive said the company would take its time entering China due to the country’s complex regulatory measures and market conditions.

“We want to build a pathway there that’s solid,” he said, adding that recent launches in Germany, Austria, Switzerland and France generated more than 2 million combined subscribers.

“We’re really excited about [today’s launches],” Wells said.

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