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Netflix set to raise prices

Netflix has announced that it will raise its subscription prices in a number of regions, despite securing better-than-expected profits.

In a note to shareholders, Netflix CEO Reed Hasting revealed that the company’s intention was to perform “a one or two dollar increase, depending on the country, later this quarter.”

The increase will only apply to new users, at least initially. Hastings added that “existing members would stay at current pricing for a generous time period.”

This increase comes despite exemplary performance from Netflix over the quarter. The company gained $1.27 billion in revenue and earned 86 cents a share – both ahead of Wall Street’s expectations.

So why the price increase? According to Hastings, it will enable Netflix “to acquire more content and deliver an even better streaming experience.”

Netflix has made a pronounced move into securing exclusive content in recent years, including the latest series of Arrested Development and fresh programs like House of Cards and Orange Is the New Black.

Such high quality content, of course, costs serious money to produce – as does the process of acquiring more of what people want to watch (a continued criticism of the service, particularly outside the US). With the deep-pocketed Amazon also stepping up its original streaming content game, it’s easy to see why Netflix felt it had to make this move.

The encouragement for a wider price rise appears to stem from a recent successful test run in Ireland, where the company raised the price from €6.99 to €7.99 with “limited impact.”

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