Netflix just got a little more expensive for its US customers. The streaming giant has increased its monthly subscription fees from $10.99 to $12.99. This is the second increase in less than two years and is the most significant since it launched streaming video in 2007.
The US is not the only country to be effected by the price hike. Countries in Latin America and the Caribbean such as Uruguay, Barbados and Belize, are also effected. This is because the company also sets prices in dollars in those places.
Interestingly the price increase will not come into effect globally. Which means customers in the UK and Ireland will not be effected. At least not in the short term.
Netflix said: “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 rise in subscription cost has largely been put down to the amount Netflix spends on content. And it spends a lot! At least $8 billion was spent last year and that's along with the planned $2 billion in new debt.
But bad news for customers means good news for investors. Following the announcement, the Netflix share price rose by 6%.
How long can Netflix ride the wave of popularity? That's debatable. With more and more customers getting added each quarter, there is more demand for content. More demand for content means more money. As we saw when Netflix paid out $100m to keep ‘Friends' streaming!
For now $12.99 per month is still good value. As is the £7.99 paid in the UK. Considering how much SKY and BT charge, it's a bargain!