Netflix Increases Subscription Service Costs For North America


Netflix Increases Subscription Service Costs For North America

Netflix, the world’s most subscribed paid online video service has raised the price of its monthly streaming subscription service by $1. The additional cost marks an increased confidence by the online video service in its product and its customer’s appreciation.

Netflix has increased its online streaming subscription service to $9.99 for all new customers in the U.S., Canada and parts of Latin America. For customers who are already subscribed, the increase will be delayed for a grace period of varying lengths before they are roped in.

The increase only affects the streaming service that allows two users to use a subscription at once. The one screen and four screen plans will not have their prices affected.

The company is counting on the more than 65 million subscribers it benefits and an increased subscription cost to fund its growing finance costs. Netflix has $4.3 billion in costs of programming every year. It is expected to hit $5 billion by 2018.

According to Rich Greenfeld, a BTIG LLC analyst, “It feels like they are confident in how well they are growing and that they have the consumer love to push the price.”

Netflix has said it plans to increase its presence across the world to countries such as New Zealand, Australia and Japan by end of 2015. It plans on finishing its global expansion by the end of next year.

Netflix has been raising prices gradually ever since its much publicized 60 percent increase in 2011. The company split its streaming and DVD-by-mail services while increasing its prices leading to a loss of 800,000 subscribers.

Subsequent price increases did not affect consumers in the same way. In Europe, the company increased prices by one Euro in August. In 2014, the company also increased prices worldwide. However, they accorded existing customers a lower rate for a single year or two.

Aside from increasing its global footprint, Netflix is working to introduce new shows on its service including new Walt Disney Co. movies by next year.

Netflix is looking to become the premier online subscription service in the world. Through increasing pricing costs, it aims to accumulate enough funding for growth and to meet increasing financial costs.

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