As the new year kicks into full effect, streaming giant Netflix is looking to raise its stock value and revenue in one fell swoop as it institutes the largest pricing increase in the company's history. Varying plans are set to go up in price, effective immediately, anywhere from 12-18 percent, depending on which plan you choose.
Netflix’s Standard tier service, which offers two high-definition streams, is increasing 18 percent, from $10.99 to $12.99 per month. The Premium plan, for customers with either a lot of kids or a lot of friends mooching off their account, provides up to four Ultra HD streams at one time is increasing about 14 percent, from $13.99 to $15.99 monthly. Finally, the company is hiking the Netflix Basic plan for the first time ever, which is a single standard definition stream, and it's going from $7.99 to $8.99 per month, a 12.5 percent increase.
“We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience,” the company said in a statement. And that makes sense, as it's projected to spend about $13 billion in 2019 on programming and operating costs. “We earn the right to increase price a bit and then we take that new revenue, invested back into the model and that sort of continuous positive cycle we get to keep going, and we foresee that that will keep going for many years in the future,” Greg Peters, the company’s chief product officer said.
The announcement of these increases has already shown a jump in Netflix's stock pricing today, up just over 6 percent from yesterday. And while this is sure to make investors happy, the increased revenue should also help on the production side of things, and subscribers can look forward to more high-budget projects. Netflix seems to be really pushing further towards its original programming, and this will help in those efforts.
While the streaming service canceled most of its Marvel shows and is expected to cancel the rest soon, it's also recently released huge hits like Bird Box, which scored 45 million viewers in the first week, the “best first seven days ever for a Netflix film.” It's also looking at interesting new ways to take advantage of the platform as we saw with Black Mirror: Bandersnatch. Despite the impending lawsuit around Bandersnatch, it seems to be a sign of things to come, and Netflix has made it clear it wants to focus more on the properties it owns, versus the ones it just licenses from others.
The last price hike from Netflix came in late 2017 and was met with minimal cancellations as a result. As of 2018's third quarter, Netflix had 58.4 million U.S. customers, with a worldwide total of 137.1 million streaming members. How that's going to change following this latest move remains to be seen.