Netflix Rates Going Up for Long-Term Subscribers

If you're a longer-term $8-a-month Netflix subscriber who's felt smugly superior to newbies paying $10 a month for the same service, that's about to end.

Last year, the company upped new-subscriber prices by $1 to $10 a month for an unlimited high-def plan, but it left rates unchanged for long-standing customers. In a letter to investors this week, which we first saw on the TV Predictions website, Netflix said it will raise rates for those who had been grandfathered in at the lower price. The price hike will come in the second or third quarter of this year, the company wrote, euphemistically saying it was "releasing" these grandfathered customers from their lower-priced plans.

Subscribers can continue paying $8 a month for standard-def streams or pony up $10 a month for HD shows and movies. Premium subscribers paying $12 a month get 4K UHD videos (when they become available), plus the ability to stream up to four devices simultaneously rather than just two.

Netflix believes the price increase will have little effect on customer retention. "Given these members have been with us at least [two] years, we expect only slightly elevated churn (subscriber defections)," the company stated in the letter.

A recent report by bandwidth-management company Sandvine said that Netflix accounts for 37 percent of all prime-time Internet traffic.

More Original Shows, New Streaming Tech

At a meeting with Netflix during CES 2016, the company said it intended to launch more than 600 hours of original programming this year, up from about 450 hours last year. The company plans to release 31 new and returning original series—up from 16 in 2015—plus two dozen original feature films and documentaries, a variety of stand-up comedy specials, and 30 original kids' series.

We also learned that in December Netflix started using a new encoding technology, called "complexity-based encoding." What that means for you is that you'll get better-looking videos even if you don't have super-fast Internet service.

In the past, the quality of the video you'd get from Netflix depended on the speed of your Internet connection. That's why sometimes the quality of the video will change while you're watching a show. Now, Netflix has switched to content-based encoding, with the idea that some programs, such as a visually complex action movies, need higher bitrates, while other types of shows, such as an animated kids' program, require less data.

By encoding videos based on the type of content rather than on the available bandwidth, Netflix can deliver better-quality streams at lower bitrates, resulting in bandwidth savings.

Netflix expects to complete the title-by-title re-encoding for its entire catalog by the end of this year.

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