How To Avoid Netflix Price Hikes In 2016: Pare Down Or Punch Out

A large percentage of Netflix loyalists in the United States and the U.K. will soon have to reach deeper into their wallets if they want to keep watching “Daredevil” and second-rate documentaries at the same quality they’re used to.

Beginning later this month, the online streaming giant will begin rolling out previously promised price hikes for long-term subscribers of the high definition, or HD, plan who had been “grandfathered” in at a lower rate. In the U.K., the monthly rate will jump to 7.49 pounds ($10.57), from the current 6.99 pounds. U.S. customers will pay $2 more per month, from $7.99 to $9.99. The hikes will begin later this month in the U.K. and then will roll out elsewhere in May based on billing periods, a Netflix spokesperson said.

The increase follows a two-year period in which rates were held at their previous level for older subscribers, a move Netflix described as a “thank you to members.”

But that thank you had an expiration date, and now it’s time to pay up or pare down. Netflix said customers wishing to keep their rates from going up will have the option to choose a standard definition, or SD, plan, which offers lower-quality video and only allows streaming on one device at a time. For subscribers who don’t use the service that much, or don’t have large families to share passwords with, that might be a good alternative.

“Impacted members will be clearly notified by email and within the service, so that they have time to decide which plan/price point works best for them,” the spokesperson said.

The price hikes were announced in 2014, so it’s clear many subscribers won’t see them coming. They also come at a time when Netflix is competing with the likes of Amazon, Hulu and a growing number of niche streaming services. Given the proliferation of alternatives — and the fact that Netflix’s own library is getting smaller by some estimates — it won’t be a surprise if a sizable number of longtime subscribers jump ship, though analysts expect the damage to be minimal.

John Blackledge, an analyst with Cowen, predicted the number of cancellations will increase “only slightly,” as Investor’s Business Daily reported. In a research note, Blackledge estimated that the price hikes will affect about 36 percent of Netflix’s U.S. streaming subscribers. As of January, the company had just under 75 million subscribers, but much of its growth over the last year has come from outside the United States.

In a letter to shareholders in January, Netflix’s chief executive, Reed Hastings, downplayed the notion that the price increase will lead to a significant exodus. “Given these members have been with us at least 2 years, we expect only slightly elevated churn,” he said.

Christopher Zara covers media and culture. News tips? Email me. Follow me on Twitter @christopherzara.