NEW YORK (
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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