Netflix announced recently that it is hiking its United States prices from 13 percent to 18 percent, making it the massive streaming services’ biggest hike since it started 12 years ago.
The most popular plan is going to raise from $11 per month to $13. When choosing that option, Netflix offers its customers the ability to simultaneously stream on two different devices connected to the internet, along with high-definition streaming. Even though the plan costs more, it’s still two dollars cheaper than the competition, HBO.
Canadian prices have already been scheduled to rise in Netflix’s next billing cycle, but the additional costs announced on January 15th are on top of that, and for American consumers only.
Netflix has stated that the extra income is going to be used to not only provide customers with better service, but also help pay for the growing popularity of Netflix’s original series and films. It’s also going to be used to recover from the heavy load of debt Netflix has accumulated to fight off competition such as Disney, Hulu, Amazon, and AT&T.
Subscribers might not be happy about the rise in prices, but Wall Street was more than happy. Shares went up more than five percent during mid-day trading.
In the past, Netflix offered a basic plan at $9 a month, though they raised rates on plans with better video quality and more options for clients.
This time around, the price for the basic plan is jumping to nine dollars a month. The premium plan that features ultra-high definition viewing is jumping from $14 to $16.
These prices are going to impact all of Netflix’s new subscribers immediately, and then affect current U.S. customers within the next three months. Netflix customers in 40 Latin America counties where Netflix bills in U.S. dollars are also being affected—except for Mexico and Brazil.
Even though Netflix’s higher prices can alienate subscribers and trigger a wave of cancelations, Netflix is betting it can gradually increase costs with more acclaimed hits. Orange Is the New Black, The Haunting of Hill House, Fuller House, Stranger Things, and most recently, Bird Box are some of Netflix’s top-rated Netflix Originals. The company states that higher prices make it so they can continue to produce such great films and series.