Netflix raised streaming prices in the US
Competition in the video-streaming space is getting increasingly stiff, but Netflix (NFLX), one of the leaders in the segment, has taken a bold step and raised its prices.
As of October 5, Netflix’s price for new subscribers for the standard plan, which allows subscribers stream on two devices at the same time, rose to $10.99 from $9.99 per month. The premium plan, which allows users to stream on four devices simultaneously, now costs $13.99 per month, compared with the previous $11.99.
The basic plan will still cost $7.99. Current US subscribers will also likely see an increase in streaming costs within the next few months.
Netflix had to react after big studios went solo
Netflix is spending big on original content, as big studios like Twenty-First Century Fox (FOXA) and Walt Disney (DIS) begin to have their own exclusive streaming services. Disney said that it will no longer show its content on Netflix and instead will stream it on its own new streaming service. As a result, Netflix said it will be spending as much as $7 billion on original content like movies and shows.
Netflix is betting that the increase in prices won’t affect demand, and Wall Street apparently liked this move, as Netflix stock rose 5.4% on Thursday, October 5. The effect on its subscriber base will only be known in coming months. As the graph above shows, Netflix’s global user base has grown at a good pace.