The business of cheap video access may be changing face over the next few years. After reporting a net income of $48 million in 2013, Netflix says it is considering increasing its U.S. monthly subscription fee.
In a letter to shareholders on Wednesday, Netflix said it plans to offer a selection of three financing options. In anticipation of a backlash from current subscribers, the company emphasized that the price increase won’t affect existing members right away.
Netflix is expected to implement a similar strategy to what it rolled out in Ireland earlier this month. The cost of the service in that region will increase by one Euro per month, but existing subscribers are grandfathered into their current subscription price of $6.99 for two years.
Over 33 million Americans currently enjoy the Netflix service for $7.99 per month, but analysts say the company must increase the fee to cover its expansion costs and the potential increased costs of net neutrality. Net neutrality, which is still in its beginning stages ,would allow Internet service providers to charge large-scale data transmitters such as YouTube, Netflix and Hulu a surcharge per gigabyte downloaded through their services. With a charge of $0.01 per gigabyte – which is believed to be a low estimate – Netflix could be hit with a bill as high as $144 million per year.
