SAN RAMON, California (AP) – Netflix raises most of its US prices by 8% to 13% as its video streaming service sees a surge in popularity spurred by government-imposed lockdowns that left people at home in the fray against the pandemic.
The increases imposed on Friday increase the cost of Netflix’s most popular US streaming plan by $ 1 to $ 14 per month, while a premium plan that allows more people to watch the service on several screens at once now costs $ 2 more at $ 18 per month. Netflix’s US Basic plan remains at $ 9 per month. It marks Netflix’s first price changes in the US since a price increase was implemented early last year.
New subscribers in the US will be charged the higher prices immediately, while the increases will gradually hit existing customers in the coming months. Netflix ended September with 73 million subscribers in the US and Canada, the vast majority of which are in the US
The move was widely anticipated after Netflix raised prices in Canada earlier this month and then ended its 30-month free trials in the US
Netflix’s price hike comes amid strong global growth as efforts to contain the new coronavirus have shut down restaurants, theaters and other entertainment venues. The Los Gatos, California-based company had 28 million global subscribers in the first nine months of the year, already overshadowing growth for the full year of 2019. The subscriber increase this year included 5.4 million additional customers in the US and Canada.
But the price hikes could test the limits of Netflix’s popularity, especially as the pandemic-induced recession deepens and forces more American households to curtail their spending.
After Netflix raised prices in the US early last year, the streaming service suffered a drop of 130,000 subscribers in the US and Canada between the end of March and the end of June.
Netflix is also facing more competition than ever, including deep pocket rivals including Amazon, Apple, Walt Disney and AT&T. And some of those are much less expensive than Netflix’s US plan.
For example, Disney’s fast-growing streaming service charges just $ 7 a month to access a library of some of the most loved movies of all time. Apple’s old streaming service only costs $ 5 a month for a relatively small selection of TV shows and movies, but the iPhone maker is trying to expand its reach by putting more money into programming and bundling with its some of its other services . For example, a plan that includes video, music, video games, and online storage is offered for $ 15 per month, or just $ 1 more than Netflix’s most popular standalone plan.
“We understand that people have more entertainment choices than ever, and we are committed to providing our members with an even better experience,” Netflix said in a statement. “We are updating our prices so that we can continue to offer more TV thedailynewsbox, shows and movies.”
The higher prices should help boost Netflix’s profits, a prospect that investors like. But Netflix’s stock fell more than 5% to $ 475.75 during Friday afternoon trading amid a wide sell-off. Shares of Netflix are up nearly 50% so far this year, largely thanks to robust growth during the pandemic.