NEW YORK (
(NFLX - Get Report)
is changing its pricing strategy yet again, this time separating its DVD and streaming services into two separate memberships.
Users who currently have unlimited DVD rentals (one at a time) and access to streaming content will have to pay $16 per month to continue receiving access to both. This compares with the original price of $9.99.
Users also can get unlimited DVD rentals (one at a time) for $7.99 per month, or unlimited DVD rentals (two at a time) for $11.99. The $7.99 package for streaming content will remain the same.
These rates are effective immediately for new subscribers and will go into effect in September for existing customers.
"An increase of [this] size is unprecedented, but is consistent with recent management comments that suggest Netflix was not satisfied with the current DVD economics," Janney Capital Markets analyst Tony Wible wrote in a note. "The move may also validate our liquidity analysis, which suggests Netflix would need to increase cash flow to fund the $2 billion in upcoming off-balance sheet obligations."
While consumers may be outraged over the price hike, Wall Street is praising the move, sending shares of Netflix up more than 1% in afternoon trading.
Earlier in the week, Netflix hit an all-time high of $301.50. The company recently announced it is expanding its streaming service into 43 countries in Latin America and the Caribbean.
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Reported by Jeanine Poggi in New York.
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