Goldman Sachs believes that he knows the reason behind Netflix's increased price on its two screen plan

Netflix Inc. is the biggest streaming service provider that offers its services to more than 65.6 million subscribers now. The company has managed to expand in almost 81 countries now and it has expansion plans that will see the company to start its operations in every country throughout the world by the end of next year.

However, Netflix recently increased its monthly subscription fees for the two screen plan package. When the company announced to do this, it raised concerned not only among the viewers but the tech experts and analysts as well. The company’s reason to increase the prices was because of providing better quality and services however Goldman Sachs thinks contrariwise. Goldman Sachs believes that he known the reason behind the raise in price of the online streaming service giant by $1 a month. Two screen plan was the most popular and chosen plan by the viewers on the platform.

Goldman Sachs believe that the sudden increase in two screen plan by $1 a month is because of the users who were sharing passwords with family and friends too much. The changes were effective from Thursday as the company upped the rates from $8.99 to $9.99. This particular plan allows viewers to watch either two standard streams or two HD streams at the same time on different devices. The increase in rates was applicable in the United States, Canada, few regions of Latin America, and in some parts of Europe as well.

Other plans of the company i.e. one screen plan and the four screen plan remained untouched hence Goldman Sachs believe that this might be the only reason for doing so. Goldman Sachs stated in a analyst note “Netflix's targeted price change was designed to reduce excessive password sharing by incentivizing users to switch to the one-screen plan, as well as encouraging households with multiple users to upgrade to the four-screen plan.”

The global multinational banking firm’s hypothesis is that Netflix realized that its viewers were sharing passwords with too many people and with time, it became a casual sharing activity where friend or family opted for a two screen option to run streams simultaneously on different devices.

Mostly, the viewers who shared passwords with their friends were not even paying a single penny to get access to it. Watching the best online video content was all free for them. However, pitching in half amounts for this plan by two friends would not have been an issue as well.  

Netflix stock was trading at $113.33 during pre-market session today.