What’s the price of better content? About $12 a year for Netflix, Inc. NFLX subscribers.
As the streaming platform expands its original production budget from $6 billion to $7 billion, it’s turning out consumer pockets to make up the difference.
In November, Netflix will raise prices for U.S. premium subscribers for the first time since 2014. While the most basic plan will remain at $7.99, the $9.99 service will increase to $10.99 and the top-tier plan jumps from $11.99 to $13.99.
"From time to time, Netflix plans and pricing are adjusted as we add more exclusive TV shows and movies, introduce new product features and improve the overall Netflix experience to help members find something great to watch even faster,” the company told Mashable in a statement.
Netflix will begin sending 30-day notices of the price hikes on Oct. 19.
Better Than The Rest?
Despite the increased expense, Netflix remains competitive with streaming rivals.
Hulu plans range between $7.99 for basic library access and $39.99 for the library with live TV.
Amazon.com, Inc. AMZN Prime Video costs $8.99 monthly as a stand-alone service, but is included free with $99 annual Amazon Prime memberships.
The stand-alone online streaming service of HBO NOW costs $14.99 per month, while cable providers offer HBO GO subscriptions for varying charges — $17.99 with DIRECTV, $15 with DISH Network Corp DISH.
Compounding Effects
Netflix's increases should compound revenue generated through steady member expansion. This quarter, UBS analysts expect 850,000 subscribers added domestically, while Piper Jaffray suggests potential growth of 16 percent.
Notably, the U.S.-specific move comes as regional subscriber growth approaches saturation, by expert estimates. Netflix will maintain pricing models for international consumers as it continues to penetrate those markets. UBS anticipates international subscriber growth of 3.95 million this quarter, and consensus expects 42-percent year-over-year growth.
Last quarter, Netflix posted a total 5.2 million new memberships — 2 million more than analysts had predicted — to hit a global figure of 104 million. Bernstein analysts estimate that the company will reach 300 million subscribers and $25 billion in recurring EBITDA by 2030.
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