Effective Oct. 5, the “standard” two-stream HD plan in the U.K. for new subscribers increases from £7.49 to £7.99 per month (up 7%), while the “premium” four-stream Ultra HD plan has gone up 10%, from £8.99 to £9.99 monthly. Current subscribers on those plans will see rates increase starting in November, with Netflix promising a 30-day advance warning.
In addition, Netflix is hiking fees in Germany and France for the standard and premium plans. The increases come after Netflix raised rates for subscribers in other territories — including Canada, Latin America and the Nordics — earlier in 2017.
Netflix timed the rate increases for the fourth quarter, given a robust slate of original content coming onto the service in the next few months. That includes “The Crown” season 2, the dramatic series following the life of Queen Elizabeth II starring Golden Globe-winner Claire Foy (pictured above), which bows Dec. 8. Q4 also has been a historically strong period for Netflix subscriber gains.
“We believe that Netflix’s pricing power has increased materially over the past few years as their content slate and technology has improved,” RBC Capital Markets’ Mark Mahaney wrote in a research note Thursday.
Other upcoming Netflix original releases include Noah Baumbach film “The Meyerowitz Stories (New and Selected)” (Oct. 13); David Fincher-directed drama series “Mindhunter” (Oct. 13); “Stranger Things” season 2 (Oct. 27); “Alias Grace,” based on the Margaret Atwood novel (Nov. 3); and “Bright,” a cop action-thriller original movie directed by David Ayer and starring Will Smith, Joel Edgerton and Noomi Rapace (Dec. 22).
Netflix obviously is poised to boost revenue growth as a result of the price increases, although it expects to continue spending heavily on content — with a budget pegged at $6 billion this year, rising to $7 billion in 2017. News of the rate hikes led exuberant investors to push the stock to an all-time high Thursday, valuing the company at around $84 billion.
Overall, analysts aren’t concerned the Netflix pricing actions will significantly slow down subscriber growth. The company, which last enacted a significant price hike across multiple markets starting in late 2015, has learned from past experience about the most effective way to introduce rate hikes, according to BTIG Research analyst Rich Greenfield.
“We suspect Netflix will push [the price increases] through rather quickly to avoid the ‘noise’ created by their multi-year grandfathering approach a couple of years ago,” Greenfield wrote in a blog post.