Here comes another price hike for Netflix customers in the U.S.: The streaming giant is raising the price of the Standard two-stream HD plan, its most popular package, by about 8% — going from $12.99 per month to $13.99.
In addition, Netflix’s Premium tier (with four streams and including 4K Ultra HD content) is going up by $2, from $15.99 monthly to $17.99 for U.S. customers. The price of the company’s Basic plan (with a single non-HD stream) will remain at $8.99 monthly.
New U.S. subscribers who sign up for Netflix’s Standard or Premium plans as of Oct. 29 will pay the higher rates immediately.
Current subscribers will see the new pricing over the next few months, according to a company rep. Members will be notified through email and also will receive a notification within the Netflix app 30 days ahead of their price increase. The timing will be based on the specific member’s billing cycle, according to Netflix.
“We understand people have more entertainment choices than ever and we’re committed to delivering an even better experience for our members,” the Netflix spokeswoman said in a statement. “We’re updating our prices so that we can continue to offer more variety of TV shows and films — in addition to our great fall lineup. As always we offer a range of plans so that people can pick a price that works best for their budget.”
On news of Netflix’s U.S. price hikes, the company’s shares popped more than 4.5% as investors saw the move as a sign of Netflix flexing its pricing-power muscle. The fee increases also stand to boost Netflix’s revenue per subscriber over the coming quarters.
During Netflix’s third-quarter earnings interview last week, COO and chief product officer Greg Peters declined to comment on when Netflix may decide to increase pricing in various markets. The company earlier this month hiked Netflix’s Standard HD two-stream plan in Canada from $14 to $15 (Canadian).
According to Peters, Netflix doesn’t use any kind of algorithm to decide when to increase pricing. “We do an assessment: Do we believe that we’re really delivering more value to members?” he said, adding that “a North Star we hold close to our heart in this whole process is we think that we are just an incredible entertainment value — and we very much want to remain an incredible value as we continue to improve the service and grow.”
Netflix last raised U.S. prices starting in the first quarter of 2019, when the Standard tier jumped 18%, from $10.99 to $12.99 per month. As the price hikes went into effect through Q2 and the back half of the year, Netflix’s cancellation rates rose but its revenue growth accelerated: The company’s full-year 2019 revenue climbed 28%, to $20.2 billion, outpacing the 20% net subscriber increase.
For the third quarter of 2020, Netflix fell slightly short on expectations for subscriber growth, netting 2.2 million subs worldwide. That came after execs told Wall Street it expected growth to slow down in the second half of the year after a coronavirus-driven boom in the first six months of 2020, when it added nearly 26 million customers globally.
As of the end of September, Netflix had 195.15 million paid streaming customers worldwide, up 23.3% year over year.