Netflix Raises U.S. Subscription Prices for New and Existing Customers
Netflix has again raised the monthly price of its most popular streaming plan in the U.S., with the two-stream HD tier now $10.99 per month for new subscribers — while existing customers will be moved to the new rate over the next several months. That’s up $1 per month from the previous $9.99 monthly fee.
The company also increased the monthly fee for its four-stream “family plan,” from $11.99 to $13.99 per month. That “premium” tier also includes select content in Ultra HD 4K format.
Shares of Netflix hit a new all-time high on news of the price hikes, climbing more than 4% and peaking at $192.80 per share in Thursday morning trading.
Wall Street analysts have speculated that Netflix would ratchet up its pricing, as content costs continue to balloon. The company is spending around $6 billion on programming this year, projected to rise to $7 billion in 2017. Netflix says it expects to operate with negative free cash flow for several years, and has turned to debt markets to help fund content expenses.
“We believe that Netflix’s pricing power has increased materially over the past few years as their content slate and technology has improved,” RBC Capital Markets analyst Mark Mahaney wrote in a research note, adding that the price hikes will likely boost long-term revenue and earnings growth.
As for whether the higher prices will cause a flood of Netflix cancellations, RBC’s surveys indicate that the service’s content lineup — not price — is “the leading churn/churn-back factor amongst Netflix subs,” Mahaney added.
Netflix last raised prices in October 2015, when the two-stream plan increased from $7.99 to $9.99. It began rolling out the new pricing level to all subs starting in May 2016. As of the end of June, the company had about 52 million U.S. streaming members.
“From time to time, Netflix plans and pricing are adjusted as we add more exclusive TV shows and movies, introduce new product features and improve the overall Netflix experience to help members find something great to watch even faster,” the company said in a statement.
Pricing for Netflix’s single-stream “basic” non-HD plan remains unchanged, at $7.99 per month.
For new members, the higher pricing for Netflix’s top two plans went into effect Oct. 5. Starting Oct. 19, the company will begin notifying existing members about when their prices will increase; Netflix said it will notify users at least 30 days in advance, based on billing cycle, on when they will see the price change.
The price changes will roll out to U.S. members over the course of the next several months, according to Netflix.
Pictured above: Netflix’s “Stranger Things” season two
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