The AP notes that this is Netflix's "biggest increase since the company launched its streaming service 12 years ago". The price hikes affect all new subscribers immediately, as you can see on the Netflix signup page, but current subscribers will begin to see the new prices reflected in their bills over the next three months. According to the report, the rate increase will allow Netflix "more flexibility to continue its aggressive spending on content".
The company is now betting it can gradually raise its prices, bolstered by a string of acclaimed hits during that past five years that have included "House of Cards", "Orange Is The New Black", "Stranger Things", "The Crown" and, most recently, the film "Bird Box". According to the Associated Press, prices for all users will increase from 13 to 18 percent and take effect in the coming months.
"With Netflix frequently tapping the debt markets on several recent occasions, the price hike could help ease concerns with a growing deficit on free cash flow to fund a likely continued escalation in Netflix's content spending, which likely topped $13 billion in 2018", CFRA analyst Tuna Amobi said. Greg Peters, the company's chief product officer, said on Netflix's quarterly investor interview last October that "we earn the right to increase price a bit" if the company keeps delivering on customer expectations.
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Netflix is raising its prices - again. The premium tier, which unlocks four simultaneous streams and ultra-HD video in addition to HD quaility, will rise to $16 a month from $14. Netflix's price increases also will extend to about 40 countries in Latin America where it bills in US dollars, including Uruguay, Barbados, and Belize.
Although your cost may be going up $2 Netflix is hoping the expanded lineup of great original shows will offset the higher cost. First, it's continuing to invest in expensive original programming.
Consumers also have an increasing array of other streaming options. The company's stock soared in response to the price increase news.