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Netflix prices set to rise

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Netflix

Netflix has warned customers that they can expect price hikes in future.

Speaking to investors recently, Netflix CEO Reed Hastings revealed that the company would be pushing up subscription prices in the US over the coming years. And where Netflix US goes, other regions tend to follow.

The company now has more than 65 million subscribers worldwide, with 42 million of those in its native US. It's extremely popular, then, but the price of securing third party content continues to take a heavy toll on the company's finances.

As The Guardian reports, at $7.7 billion, it's 4.6 times its net revenue.

Netflix needs to make more money, then. As well as securing new customers, the company means to generate more income from its existing customers.

Part of that will come from motivating customers to move up from the bog standard $7.99 /£5.99 per month single-stream standard definition package subscription to the higher tiers.

These add the ability to stream to more screens at higher resolutions - for more money, naturally.

Read More: Netflix vs Amazon Prime Instant Video

It also means that the general cost of subscriptions will be raised - but not immediately, and very gradually. "We want to take it very slow," Hastings said. "Over the next decade I think we’ll be able to add more content and have more value and then price that appropriately."

Netflix will also raise its income by entering two tricky but potentially lucrative markets in the East, Japan and China. With Japan in particular it plans to succeed where Hulu failed by launching with aggressive pricing, local content, and even some original content.

Graham Culleton

July 17, 2015, 2:15 pm

Raising prices over time...shocker?

Matthew Bunton

July 17, 2015, 11:37 pm

Not really suprised by this news, as an early adopter I have been fortunate enough to be on a price freeze since launch.

godafoss

July 18, 2015, 9:08 am

Colour me surprised. Get them hooked on cheap service, reel them in and then they are at your mercy and by gradually raising prices it'll be like a a lobster in a pot as you slowly raise the heat, it won't even know it's being cooked.

LeeTronix

July 18, 2015, 11:40 am

It is obvious it will raise prices but I would expect better content and newer programs and films to justify it.

Seymour Cat

July 18, 2015, 4:30 pm

"I would expect better content and newer programs and films to justify it."

No kidding. If they can match the amount of content US subscribers have access to then maybe a price rise will be justified. I know you can use a PC and fool Netflix into thinking you are in the USA, but that's not helpful for watching on my nice big smart TV.

Prem Desai

July 18, 2015, 4:50 pm

Not surprising or newsworthy really. It's a risk every service provider / manufacturer / retailer must take - balance profit margin, rising costs, lost sales because of price increase, etc.

Now, if they had actually increased / decreased their price - that is worth knowing.

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