Netflix Prices Are Going Up Again

You're going to have to pay significantly more to watch the new season of Stranger Things, it turns out. Netflix has quietly increased its prices for new and existing customers for the second time in the past two years. The service's standard tier pricing will now cost $10.99 per month, up about ten percent from the previous level of $9.99. The last increase was in 2015, from $7.99 to $9.99, meaning that the cost of the service has gone up by 38 percent in just two years.

Wall street is praising the cost increase, which investors hope will help with the negative cash flow Netflix has incurred by spending lots of money on original programming. Of course, the plan could backfire if the price increase results in subscribers jumping ship, a possbility that seems more likely now that rivals such as Hulu are attracting attention with their own content acquisitions. Wall street thinks that Netflix subscribers will pay any price for the streamer's content. Looks like we'll find out if that's true.

Via Variety.

Netflix has again raised the monthly price of its most popular streaming plan in the U.S., with the two-stream HD tier now $10.99 per month for new subscribers — while existing customers will be moved to the new rate over the next several months. That’s up $1 per month from the previous $9.99 monthly fee.

The company also increased the monthly fee for its four-stream “family plan,” from $11.99 to $13.99 per month. That “premium” tier also includes select content in Ultra HD 4K format.

Shares of Netflix hit a new all-time high on news of the price hikes, climbing more than 4% and peaking at $192.80 per share in Thursday morning trading.

Wall Street analysts have speculated that Netflix would ratchet up its pricing, as content costs continue to balloon. The company is spending around $6 billion on programming this year, projected to rise to $7 billion in 2017.

Netflix says it expects to operate with negative free cash flow for several years, and has turned to debt markets to help fund content expenses.

“We believe that Netflix’s pricing power has increased materially over the past few years as their content slate and technology has improved,” RBC Capital Markets analyst Mark Mahaney wrote in a research note, adding that the price hikes will likely boost long-term revenue and earnings growth.

As for whether the higher prices will cause a flood of Netflix cancellations, RBC’s surveys indicate that the service’s content lineup — not price — is “the leading churn/churn-back factor amongst Netflix subs,” Mahaney added.

Netflix last raised prices in October 2015, when the two-stream plan increased from $7.99 to $9.99. It began rolling out the new pricing level to all subs starting in May 2016. As of the end of June, the company had about 52 million U.S. streaming members.

Get the rest of the story at Variety.

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