Netflix raises rates, largest in twelve year history

Hollywood, MD- The last price hike from Netflix came in 2017. Earlier this week they announced another hike of 13 to 18 percent. This will be the biggest increase in the online TV/Movie subscription service in its 12 year history.

To put it in perspective, Netflix’s most popular plan, the standard plan went from $11.00 a month to $13.00 a month. Previously, Netflix had offered a basic plan for $8 a month, but has raised that to $8.99.

These new prices are in effect for new customers, and will begin rolling to existing customers over the next three months. Customers in 40 Latin America countries where Netflix bills in US currency will also be affected, expecting key international markets such as Mexico and Brazil.

Netflix has almost 79 million subscribers outside of the US as of September 2018., while just about 58 million in the US.

While subscribers bemoaned the price hike announcement, Wall Street cheered it, sending Netflix’s shares up 6.5% on Tuesday.

The extra cash will help Netflix’s huge investment in original shows, films, and finance heavy debt it assumed to ward off rivals such as Amazon, Disney, and AT&T.

There is a worry that the higher prices could alienate some subscribers and trigger a wave of cancellations. Netflix faced a huge backlash in 2011 when it unbundled its video streaming service from its older DVD-by-mail service. They lost about 2%- 600,000, subscribers after the switch.

“This is a more aggressive move than (investors) were expecting,” said Moody’s analyst Neil Begley. : It shows Netflix is pretty confident that it still has some pricing power in the U.S.”

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