Netflix, Inc. (NASDAQ:NFLX) is increasing the price of its famous streaming subscription to $9.99 per month for new customers across the United States, Canada and some regions of Latin America. The announcement follows a similar hike in Europe this year.
Though current customers can enjoy grace period of different lengths before the company lifts prices for them. The latest hike covers the plan that allows two people to use a subscription at the same time. NFLX hasn’t changed the price for one-screen and four-screen plans.
The company is relying on subscriber gains and increased prices to maintain revenue growth and fund the cost of its television and film offerings. Netflix has $4.3 billion in programming expenses over the next year.
An analyst at BTIG LLC, Rich Greenfield said it seems like the company is certain about how well it is moving forward and that it has the love of its customers to push the prices. Greenfield has a ‘Buy’ rating on the stock.
NFLX reported it is looking forward to finish its worldwide expansion by the end of 2016. The company has added Japan, New Zealand and Australia this year and is now present in over 50 countries. It will commence offering its streaming services in Italy, Spain and Portugal later in October.
The company has lifted prices in a steady way, except the terrible hike of 60 percent in 2011 when it was making efforts to split its DVD-by-mail and streaming segments. NFLX lost about 800,000 customers in the U.S. when it started the split.
However, price hikes after that haven’t triggered subscribers in the same way. Netflix boosted European prices a couple of months ago by 1 euro, followed by a global price hike last year.
The latest move was essential to fund an increasing number of original content and cover the expenses of licensing shows.
