Netflix Inc (NASDAQ:NFLX) announced last week that it will increase the price of its plans barely a year and a half since the last price hike.
Netflix hikes prices for Standard and premium plans
The standard plan has increased by $1 to $14 per month. The Premium package offers benefits like 4K resolution, the ability to stream in four devices at a go, and HDR image quality will cost two dollars more at $18 per month. However, the company has not increased the basic subscription price that streams DVD-quality 480p with limited simultaneous streams as it will continue costing $9 per month.
The increase is immediate for new customers, but for existing customers, it will be a while before the price change takes effect. Those subscribers on the Standard and premium package will receive an email and app notification a month before their price change, depending on their billing cycle
This price hike, which was highly anticipated by investors and analysts though unwelcome by subscribers, had been touted to come sometime this year or possibly in 2021. Early this month, Netflix hiked prices in Canada, and the streaming giant is expected to bump its prices roughly after every two years. Netflix raised prices last in the US at the beginning of last year, with the premium subscription rising by $2 while the basic plan increased by $1.
Why is Netflix hiking its prices?
The company has not indicated why it is hiking the price. But the growing number of rivals seeking the same marquee exclusives and an increase in the cost of production due to the pandemic might be the trigger. A company spokesperson said that they understand several entertainment alternatives than before, but Netflix is determined to offer an exciting experience to customers. As a result, it is updating its prices to continue offering a variety of films and TV shows. The company has a $17 billion content budget, and even with the pandemic disrupting production, the company expects its programming to go on this year as planned.