Netflix hikes U.S. subscription price by $1 a month

LOS ANGELES Fri May 9, 2014 11:00am EDT

LOS ANGELES May 9 (Reuters) - Netflix Inc on Friday increased the price of its most popular video streaming plan by $1 a month to $9 for new customers in the United States, the company's first price hike in its largest market in three years.

The movie and TV streaming service suffered from a consumer exodus and stock plunge after it announced an unpopular price increase in July 2011 of up to 60 percent for some U.S. members.

This time, the increase is 12.5 percent, and the company is letting current customers keep the $8-a-month price for two years for a plan that allows for two video streams at the same time on different devices.

The price for U.S. customers to receive DVDs in the mail will remain the same, starting at $8 a month.

The company said on April 21 that a price hike was coming, and analysts speculated that Netflix would see little backlash for a small price hike, given growing demand for its service.

Netflix built itself into a major force in Hollywood, spending heavily for content for its 35.7 million streaming subscribers in the United States, and 12.7 million in Latin America, Europe and Canada.

The monthly subscription price in most countries outside the United States also was raised by roughly $1 for new customers, a Netflix spokesman said. Netflix operates in 41 countries.

The higher price will allow it to spend for new movies and TV shows, including its original series like its Kevin Spacey thriller "House of Cards," and to improve the streaming service.

"We will continue to make Netflix the best possible place to enjoy entertainment across all the devices our members own," Netflix said in a blog post on Friday.

Netflix also introduced an $8-a-month plan for one standard definition stream at a time. Customers can pay $12-a-month to watch four streams at a time.

Netflix is investing more in TV shows and movies to increase subscribers while it faces competition from online video players such as Amazon.com Inc and Hulu, as well as on-demand content from cable operators.

The company has won critical acclaim for "House of Cards" and other original shows such as "Orange is the New Black."

On Thursday, Netflix shares closed at $321.66 on Nasdaq. (Reporting by Lisa Richwine; Edited by Ronald Grover and Ken Wills)

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Comments (2)
jaysails wrote:
I currently have one Netflix account and 4 Sirius Sat radios. Netflix, I could take or leave, and use it rarely. Sirius we all use everyday, and would not part with. With username and password, you, or anyone can use Netflix. Sirius uses radio ID’s that make that impossible. Same number of outstanding shares. With increase in subscription prices for Netflix, I think the subscriber numbers will fall for Netflix, which will make them close to the same for both companies. With both Apple and Microsoft taking a hard look at picking up Sirius, if your looking for a stock, its a no brainer.

May 09, 2014 11:35am EDT  --  Report as abuse
ThoseWhoServe wrote:
Apparently, the economies of scale no longer apply. The more customers Netflix signs up, the more servers they acquire, the more the powers that be then increase prices (again).

May 09, 2014 11:41am EDT  --  Report as abuse
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