Netflix is increasing most of its US prices by 8% to 13% as its video streaming service unleashes a surge in popularity amid coronavirus-induced lockdowns.
Among the increases imposed on Friday, Netflix’s most popular U.S. streaming plan is increasing by $ 1 to $ 14 per month. A premium plan that allows more people to see the service on different screens at the same time now costs $ 2 more at $ 18 per month. Netflix’s basic US plan remains at $ 9 per month.
It is the first price change from Netflix in the US since it started increasing.
New US subscribers will be billed for the higher prices immediately, while the increases will gradually affect existing customers over the next few months. Netflix ended September with 73 million subscribers in the US and Canada, with the vast majority in the US.
“”[T]This shows that the company is secure in its competitive position and value proposition despite possible economic uncertainties, “wrote the analysts of Raymond James in a statement to investors.
Wall Street was expecting a price hike after Netflix increased its prices in Canada earlier this month and then ended 30-day free trials in Entertainment.
Netflix gained 28 million subscribers worldwide in the first nine months of the year, already surpassing its growth for the whole of 2019. This year’s subscriber growth included a further 5.4 million customers in the US and Canada.
However, the increases could test the limits of Netflix’s popularity, especially as the pandemic-triggered recession deepens and forces more US households to cut their spending.
After Netflix hiked its US prices early last year, the streaming service saw a drop of 130,000 subscribers in the US and Canada from late March to late June.
Netflix is also facing more competition than ever, including rivals such as Amazon, Apple, Walt Disney, and AT&T. Some of these plans are far cheaper than Netflix’s US plan.
Disney’s fast-growing streaming service costs just $ 7 a month to access a library that contains some of the most popular films of all time.
Apple’s one-year streaming service costs just $ 5 a month. So far, Apple has offered a relatively small selection of TV series and films, but the company is investing more money in programming and bundling streaming with other services. The Apple One plan, which includes video, music, video games, and online storage, costs $ 15 a month, or just $ 1 more than Netflix’s most popular standalone plan.
“We know people have more entertainment options than ever before, and we are committed to providing our members with an even better experience,” Netflix said in a statement.
The higher prices should help boost Netflix’s profits, a view investors like. However, Netflix stock fell more than 5%, closing at $ 475.74 on Friday.