Netflix, Inc. is facing a class action lawsuit in California from a customer over new monthly subscription prices. The lawsuit was filed by George Keritsis filed on Wednesday in California federal court. The plaintiff says the online streaming giant guaranteed that he would be charged $7.99 per month for the life. But the company has breached its contract by raising its monthly subscription fees.
The lawsuit estimates that more than 20 million people could be part of the class action against the streaming company, according to Hollywood Reporter.
Keritsis says he saw an ad promising that the online steaming service would charge a subscription fee of $7.99. He was told by the company’s representative on the phone that Netflix would not increase monthly subscription prices as long as the subscribers maintained the subscription service continuously. He was ensured that the fee would be “grandfathered”.
“For a period of time, Netflix solicited persons to subscribe to Netflix’s streaming service by guaranteeing that Netflix would not increase monthly subscription prices as long as the subscribers maintained the subscription service continuously. Netflix has broken its contract with these subscribers by unilaterally raising monthly subscription prices,” the complaint states.
However, Keritsis was surprised to see a message from the company in June that his “special pricing” is ending and his new price would be $9.99 per month.
“Plaintiff protested that the price increase was inconsistent with the lifetime price guarantee. The company’s representative stated that they would raise prices for all grandfathered accounts, not just plaintiff’s account,” the complaint states.
Keritsis is seeking class certification for “all persons who entered into an agreement with Netflix for a streaming plan at a subscription price that Netflix promised not to increase for as long as they continuously maintained their subscriptions.”
Why Is Netflix Raising Prices?
In October, Netflix, Inc. announced that it would increase the price of its standard HD plan to $10 per month. This represents an increase from $9 per month for the current customers and $8 a month for longer-term customers who had been grandfathered in.
According to a report from CNN in April, the company plans to roll out the price hike gradually over the course of the year. The online streaming service said that more than half of its subscribers have been grandfathered into the lower prices.
Netflix’s rates hike makes sense as the company is investing money to produce an original content. The company continues to battle the likes of Hulu, HBO, YouTube and Amazon as they all work to develop the best original video content. Original content is key to attracting subscribers and the streaming giant is getting ready to unveil its latest original series “Stranger Things” this summer.
Stranger Things, from newcomer writer/director brothers Matt and Ross Duffer, will have eight episodes. The series is set in small-town Indiana in the 1980s. Joyce Byers (Winona Ryder) is a mother of a young boy (Will Byers), who disappears under mysterious circumstances. She searches for her missing son and appeals to the local police for the help to find the boy. The police chief (David Harbour)’s seems far from experienced in handling this kind of serious case.
Last month, Netflix announced that it will produce an original content for the Indian market. The online streaming service’s first production, a crime drama series, is adaptation of the 2006 best-seller “Sacred Games” by Vikram Chandra. It will shot on location in India and produced by Phantom Films, a local production company.
Shares of Netflix, Inc. have dropped by 21.62% year-to-date.