Netflix to Increase Prices This Month

As of Thursday, Netflix started increasing prices for its subscribers in the U.S.

The new price for the least expensive plan is not changing from its current monthly rate of $7.99. However, the video streaming services’ most popular plan, which it calls the standard plan and allows two streams simultaneously and HD will increase from a current $9.99 monthly to $10.99.

The most expensive plan that supports such features as 4K resolution and four streams simultaneously running, will increases from its current $11.99 per month to $13.99.

People who have recently signed up with Netflix saw the increase as of Thursday October 5, while current subscribers will begin to be notified October 19 and the change will take place during their following billing cycle.

The price increases at Netflix have always caused some form of drama with investors.

Two years ago, during October of 2015, Netflix increased its prices for its new members and then started an “un-grandfathering” process with the, then existing customers to new, higher prices.

When most of that process was completed in 2016, public and media chatter increased to such a high degree that the streaming video service blamed it for the subscriber growth miss it suffered the following quarter.

Last year during the earnings call when Netflix blamed the chatter on lower subscriber numbers, CEO Reed Hastings told analysts that people do not like increases in price and the company knows that.

Subscribers might not like increases in price, but the increases will likely continue to be a necessary measure as Netflix continues to spend more on its content, which is expected to reach over $7 billion in 2018, said Ted Sarandos, who is in charge of content.

Funding original productions can be expensive and the company has made several moves of recent, such as hiring Shonda Rhimes away from ABC and acquiring Millarworld the publisher of comic books.

Nevertheless, despite the increase in price, Netflix remains a far better deal than cable as far as viewing time.

During the just ended summer, analysts found that the average package of pay-TV cost more than three times the price per hour as did Netflix.

The cost per hour of traditional cable package was approximately 42 cents, while Netflix averaged just 10 cents.

The big lead Netflix holds should not be hurt that much by a price increase of just $1 to $2 per month.

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