Netflix may move to tiered pricing

Netflix (Nasdaq: NFLX) said it may soon adopt a new pricing model that will  provide different tiers of service at different price points.

Price flexibility may help the company attract more subscribers, CEO Reed Hastings said during the company's earnings call with investors. "In going from 33 million U.S. members to hopefully more than twice that, every bit of savings is important to people," he said. "We definitely look at those factors." 

Since splitting its DVD and online streaming business, Netflix has priced its streaming service at $7.99 a month. In 2012, the company began offering an $11.99 plan that allowed simultaneous use on up to four devices. In addition, it has tested a $6.99 single-stream tier.

Existing subscribers would be "generously grandfathered" into their rates should the company make any major changes for new members, the company's quarterly letter to shareholders said. "There would be no material near-term revenue increase from moving to this broader set of options," It said. Netflix executives stressed during the webcast that they are still testing different pricing models and have not figured out how to proceed.

That's not the case overseas, where Netflix raised prices Jan. 10 in Ireland by one Euro a month. The rate hike affects new subscribers immediately but won't hit existing subscribers for two years. "It's too early to tell if this change will materially affect our growth in Ireland," the company said in the shareholder letter.

The company also addressed the D.C. Circuit's ruling overturning parts of the FCC's net neutrality rules for the first time Wednesday, downplaying its near-term implications. Should ISPs begin blocking or degrading Netflix service, the company would urge its subscribers to "demand the open Interment they are paying their ISP to deliver," the letter said. 

For more:
- Read the letter to shareholders
- Watch the webcast

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