Netflix is about to get pricier for many users: The streamer this week is notifying more U.S. customers that its previously announced fee hikes will take effect starting with May 2019 billing cycles.
The company in January announced higher pricing for all plans — representing its biggest price increase to date. The new rates applied to new subscribers immediately, and since then Netflix has been gradually moving existing customers to the higher-priced tiers, based on each member’s billing cycle.
Under the new pricing, Netflix’s Standard plan (with two HD streams) increases by $2 per month, from $10.99 to $12.99. The Premium plan, which provides up to four Ultra HD streams, is increasing from $13.99 to $15.99 per month and the Basic plan (one non-HD stream) is going up for the first time, from $7.99 to $8.99 per month.
The company has told customers that it’s raising prices to “continue investing in great entertainment and improving the overall Netflix experience.”
Will the price hikes hurt Netflix? Wall Street isn’t expecting a mass exodus of subscribers, although there will inevitably be a certain number of customers who will cancel their Netflix accounts. It’s worth noting that when Netflix last raised rates in the fourth quarter of 2017, that resulted in minimal cancellations and no noticeable slowdown in net subscriber additions.
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Meanwhile, analysts have projected Netflix will rake in around $1 billion in additional top-line revenue in 2019 from the rate hikes in the U.S. alone. As of the end of 2018, Netflix reported 58.5 million U.S. streaming customers (out of 139 million worldwide).
For now, Netflix remains one of the most powerful brands in media — a position that reinforces its pricing power. The company was the fastest-growing U.S. brand from 2018-19 in terms of its increase in estimated brand value, according to consulting firm Brand Finance. Netflix was the No. 3 “most loved” brand in America overall, behind Amazon and Google, and was No. 1 among millennials, per a Morning Consult 2019 survey released Wednesday.
Even at $12.99 per month, Netflix’s Standard plan — its most popular package — still undercuts HBO Now ($15 per month) although it’s now going to cost more than Hulu’s ad-free VOD plan ($11.99 per month). According to a report last fall by Wall Street analyst firm Piper Jaffray, Netflix has been in a solid position to raise streaming prices on a regular basis, based on its survey of about 1,100 U.S. Netflix users that found 71% said they felt content on the service has improved.
Netflix’s price increases come ahead of streaming VOD launches by Disney, Apple, AT&T’s WarnerMedia and Comcast’s NBCUniversal — and by charging higher fees, Netflix, as the market leader, may actually put a damper on uptake for rival SVOD offerings.
The boom in subscription streaming services has resulted in a feeling of “subscription fatigue,” according to Deloitte’s 2019 Digital Media Trends survey. Almost half (47%) of U.S. consumers say they’re frustrated by the growing number of subscriptions and services required to watch what they want.
Consider that U.S. consumers are willing to spend a total of around $38 per month for all their streaming services, according to research firm Magid. With Netflix’s $13-per-month Standard plan now around one-third of that, that means there’s even less share of wallet for the rest of the SVOD market.
Correction: An earlier version of this story reported that all of Netflix’s customers will see a price increase in May. In fact, according to Netflix, the company has been gradually moving existing subscribers to the higher pricing since January, depending on their billing cycle.