Netflix Announces They're Raising Prices, This is Their Biggest Increase Ever

consumer
January 15, 2019Jan 15, 2019

The cost of your TV fix is about to go up. Netflix just announced that they're raising their prices.

Netflix rolled out an 18 percent increase for their U.S. customers. This is the biggest increase in the companies history since it was founded in 2007.

Its most popular plan will see the largest hike, going to $13 per month from $11. That option offers high-definition streaming on up to two different internet-connected devices simultaneously.

The cheapest plan will go from a $8-a-month to $9. That is the most basic video quality, and it allows viewing on only one device at a time. They are also raising the cost of their premium plan, which offers ultra-high definition video, from $14-$16.

The price rise will affect all new subscribers immediately. It will then start to impact existing customers over the next three months. That will impact all of their 58 million U.S. subscribers.

This is the third price hike for Netflix. They last raised their prices in 2017. Customers in about 40 Latin America countries where Netflix bills in U.S. currency will also be affected, excepting key international markets such as Mexico and Brazil.

It's possible that higher prices could lead to a string of cancellations.

"For instance, Netflix faced a huge backlash in 2011 when it unbundled video streaming from its older DVD-by-mail service, resulting in a 60 percent price increase for subscribers who wanted to keep both plans. Netflix lost 600,000 subscribers after that switch," noted Fox.

However, the company is hoping they can get away with raising their prices because of hit Netflix originals. Those include "House of Cards," ''Orange Is The New Black," ''Stranger Things," ''The Crown" and, most recently, the film "Bird Box."

"We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience," the company said in a statement.

However, it's that original content that requires them to raise their prices. The company burned through about $3 billion last year, and it is expecting to do so again this year. The company has a negative cash flow, and it was $12 billion in debt before borrowing another $2 billion in an October bond offering.

News of the price hike sent a charge into shares of Netflix Inc., which rose more than 5 percent in early trading, to $351.40.

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