As annoying as it may be, Netflix has once again raised its subscription fee by US$1 to US$2 per month in both the United States and Canada. The company said the new change is an attempt to cover the fee for programs that can help it compete in the crowded streaming TV market.
For standard subscription which lets you simultaneously stream on two devices and costs about US$13.99 now has a new price and it’s US$15.49/month.
It’s not only in the US that the price point got hiked. Subscribers in Canada will also experience the same change with the aforementioned plan now costing about CA$16.49 from CA$14.99
Shares of Netflix gained nearly 3% to $533.84 on Nasdaq after Reuters broke the news of the price rises. They closed 1.3% higher at $525.69.
The price hike took effect immediately and new customers will be able to join the platform on the new plan while existing subscribers will see the new prices in the coming weeks when they receive their monthly bills.
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“We understand people have more entertainment choices than ever and we’re committed to delivering an even better experience for our members,” a Netflix spokesperson said.
“We’re updating our prices so that we can continue to offer a wide variety of quality entertainment options. As always we offer a range of plans so members can pick a price that works for their budget,” the spokesperson added.
Netflix is known across the globe as the number one go-to for on-demand movies and TV shows and so much more. But the streaming market is also getting saturated with different brands also coming onboard while slowly gathering their own audiences as well.
Netflix has added customers despite prior price increases, which shows its members have been willing to accept higher costs, Evercore ISI analyst Mark Mahaney said.
“This is evidence that Netflix has pricing power,” Mahaney said.
The streaming service also announced its plan to spend about US$7 billion in programming back in 2021 but it’s yet to disclose its spending budget for the new year 2022.
The U.S. price of Netflix’s premium plan, which enables four streams at a time and streaming in ultra HD, was increased by $2 to $19.99 per month. For Netflix’s basic plan, with one stream, the cost rose by $1 to $9.99 per month.
In Canada, the premium plan rose from CA$2 to CA$20.99, and the basic plan was unchanged at CA$9.99.
The new base plan in the US costs about US$15.49 per month and it’s more than what competitors are asking for. Take HBO Max, for example, its base subscription starts at just US$11.99 per month for 12 months.
Netflix has a large chunk of its audience in both the US and Canada with some 74 million streaming customers as of Sept. 2021. That said, the region accounts for about 44% of the company’s revenue in 2021 Q83.
Most of the company’s recent pickup in subscribers has come from overseas.
Even though the COVID-19 pandemic caused millions to be locked indoors and chose between the unending list of streaming services online, Squid Game was a big hit for Netflix as it helped acquire more customers. Total global subscriptions reached 213.6 million.
Netflix is expected to report the number of its subscribers soon in its quarterly earnings.
The company’s next subscriber report is due Thursday when Netflix posts quarterly earnings. Analysts project the company will report 8.5 million new sign-ups from October through December, according to Thomson Reuters I/B/E/S data, bringing its global subscriber base to 222 million.
