Netflix raises prices by $1, has 'customer love to push the price,' analyst says

Netflix (NASDAQ: NFLX) has announced its second major price increase in two years, upping the monthly cost of its most popular streaming service by $1 to $10 a month.

The price bump -- which affects accounts that let up to three users stream video simultaneously  -- come as Netflix's subscriber ranks have exceeded 65 million.

Netflix remains the dominant online video distributor and is having an increasingly significant impact on the pay-TV business, influencing not just cord-cutting, but linear TV ratings and advertising, too.

However, the service is being challenged in the content acquisition market by rival SVOD services Hulu and Amazon Prime Video (NASDAQ: AMZN).  

Amid this content arms race, Netflix has said it will spend $4.3 billion on content over the next year. That annual budget will approach $5 billion over the next three years. Thus, Netflix appears to be raising its prices in order to pay for additional content.

The price hikes also come amid aggressive international expansion, which Netflix says it will complete by the end of 2015. This year alone, the SVOD service has launched in Australia, New Zealand and Japan, with plans to open shop this month in Spain, Portugal and Italy. It is now operating in more than 50 countries.

For his part, BTIG analyst Richard Greenfield believes a $1 price hike at home will have little impact on Netflix's continued subscriber growth. 

"It feels like they are confident in how well they are growing and that they have the consumer love to push the price," he told Bloomberg.

For more:
- read this Bloomberg story
- read this CNET story

Related articles:
Netflix an acquisition target? The case for and against
Hulu expands content deal with Viacom; conglomerates continue to steer away from Netflix
Netflix's potential $6B original content drive could have ripple effect on licensing costs

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