Did you get the Netflix email this morning? The announced dollar price hike is here. Netflix is moving its base subscription from $7.99 to $8.99 for new subscribers. Before the old subscribers get out the pitchforks and torches, you are getting grandfathered in at the $7.99 rate for two years. Plenty of time to exceed your bandwidth cap with Comcast.
The $8.99 cost is not exactly a surprise. During its earnings call on April 21, the company announced a price increase of one to two dollars depending on the country. Evidently the U.S. hasn’t recovered enough to absorb a two dollar hit.
Netflix is upping the cost of the service to ensure it can secure more original content and overall improvements to its streaming service. We all need more Frank Underwood. The company isn’t the only one upping its subscription price. Its chief competitor, Amazon, upped its Prime subscription from $79 to $99. Granted you get to know your UPS driver by name with Amazon’s slate of offerings.
Amazon has been moving to secure more exclusive deals in the content arena as of late. The company signed HBO to an exclusive deal. Amazon has also put out a bevy of original content pilots and let the customers choose which made it to a series order.
Outside of the two streaming juggernauts, Microsoft is jumping into the fray. While late to the party, they are bringing the big guns to bear. A Halo live-action series produced by Steven Spielberg for one. Playstation is also jumping into the original content arena for its console.
So, new subscribers to Netflix will be shelling out $8.99 starting today. Those of us that have binged watch House of Cards are safe from the dollar hike for two years. The likelihood that this is a negative on Netflix’s bottom line is doubtful. A dollar isn’t enough to cause Internet rage syndrome.
Reaction on Wall Street is subdued. The stock is essentially flat, but it is tied to the broader moves of the market. Netflix is a momentum stock, so headlines play a role in what the stock does on a daily basis. The dollar increase will placate investors, who want the company to increase revenue and growth.