December 31, 2017
Netflix subscribers in the US will be called to pay 13-18% more by the end of their billing cycle, as the popular streaming service will impose price raises for all its plans. The single device plan will go up to $8.99 from $7.99, the 'HD standard' (two devices playback) plan will be raised to $12.99 from $10.99, while the top tier '4K Premium' (four devices playback) plan will now cost $15.99 instead of $13.99 that it used to.
As Netflix plans can be bought for a period of up to three months, existing customers will see the price increase by April at the latest, while new customers will join the platform with the raised prices. The increase concerns Latin America and Caribbean-based users, but not Mexico and Brazil.
As the official statement mentions: “We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience for the benefit of our members.” The company had already raised their prices selectively about a year ago, excluding the basic plan from the price bump. All this was to be expected as the company invests heavily in the production of original content as well as the coverage of other markets around the world that come with amazing growth potential. Investors also seem to agree with this move, as the Netflix stock went up by a whopping 6.5%, following the relevant announcement.
However, no move like this one ever comes without risks. Netflix is in massive debt, as it’s aggressively investing in order to achieve to be the first to get a piece of the pie on new markets, creating localized content, and reaching out to pristine audiences that don’t use any type of media streaming services right now. In the same time, their share in the US market is expected to be solidified soon, with the last quarter growth being of the rate of 10.7%. In the same time, Disney is preparing to launch their Disney+ service, while Amazon and Apple will also enter the US market with dynamism. This will inevitably cause some Netflix subscribers to jump ships, and when combined with the increase, this may happen at a larger scale than what the company currently estimates.
Still, Netflix has 20 million more subscribers overseas than in the US, and this figure can go much higher soon. That is why Netflix is placing a bet on the global scale market, as establishing their position on emerging markets will be the key in paying back those hefty loans.
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