Speculation about a price increase has been swirling for months and now Netflix has confirmed rate hikes for its two most expensive plans.
Netflix has increased its prices in the U.S. and set its most popular plan at $14/month (previously $13) and Premium plan at $18/month (previously $16). The $9/month Basic plan is staying the same.
According to The Verge, the price increase kicks in immediately for new subscribers and will roll out over the next few weeks to all existing subscribers. The company told the publication that the move for U.S. subscribers doesn’t “influence or indicate a global price change.”
Last month, Jefferies predicted that a Netflix price increase was coming in the near- to mid-term. Analyst Brent Thill estimated that if Netflix again raised pricing on its plans by $1 or $2 per month, the company could rake in an additional $500 million to $1 billion in revenue during 2021. He said the price hike could lead to some customer churn in price-sensitive markets but seemed confident that Netflix could pass off an increase due to its "deepening content library and outsized consumer value proposition."
“While the stock has hit a bit of a lull post earnings given soft 3Q guidance and a somewhat light summer content slate, we continue to believe Netflix will deliver normalized high double-digit top line growth with sizable margin expansion over time. Valuation remains the biggest hurdle, but we see significant long-term upside (bull case of ~46% stock appreciation by 2022) and sustainable high-quality fundamentals (competitive moat, top management team, industry shift to OTT),” wrote Thill in a research note.
Netflix added 2.2 million net memberships in the most recent quarter, fewer than the 2.5 million it predicted.
Netflix last raised prices in early 2019. The price for Netflix’s most basic tier climbed from $8 per month to $9; the price for the Netflix’s most popular tier, which allows viewing on two screens at a time and includes HD video, jumped from $11 per month to $13; and the company’s highest tier, which allows up to four screens at once and include Ultra HD video, increased from $14 per month to $16.