Why Netflix Is Quietly Hiking Its Prices

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Netflix Inc. (NASDAQ: NFLX) made waves in the market when the company quietly said that it would raise the price for its monthly streaming service in the United States. Although the price increase isn’t that much per customer, it adds up over Netflix’s 104 million subscribers.

According to the deal, Netflix is raising the price for its standard tier service to $11 from $10, while the premium tier will be raised to $14 from $12. The basic tier service will remain at $8 per month.

This will affect new subscribers going forward, and current subscribers will receive the announcement on October 19.

Netflix is making this move, although unpopular, for the greater good of funding more content to feed its subscribers. After facing stiff competition from Hulu, HBO, and other streaming services, this seems like the obvious move.

At the most recent Emmy Awards, streaming services won and big. Hulu cleaned up taking the award for Outstanding Drama, which was the first time a streaming service had won. Separately, HBO picked up 29 awards, Hulu had 10 and Netflix had 20.

What all these services have in common is that they are continuing to churn out new content, but this takes capital and all seem to be in agreement.

Netflix released a statement regarding the price increase:

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 last Netflix price bump was seen in 2015, and it was more or less the same of what we’re seeing now. Although we can most likely expect more price increases in the future, an increase of one extra dollar per month every few years seems worth the new premium content that Netflix is putting out.

Keep in mind that this may slow subscriber growth, but Netflix is past the point of its incredible growth so that may be a wash. On the other hand, with Disney splitting from Netflix in 2019, this could pull away some subscribers as well.

Shares of Netflix were last seen up more than 3% at $190.43, with a consensus analyst price target of $188.00 and a 52-week range of $97.63 to $192.80.