If your Saturday evening usually involve some version of the couch and Netflix (NFLX) - Get Netflix, Inc. Report, get ready to pay more — the Los Gatos, Calif.-based streaming platform is raising the prices of its subscriptions by $1 to $2 a month.
Subscription Costs Rising Fast
The cost of the standard Netflix plan will rise to $15.49 from $13.99 in the U.S. and C$16.49 from C$14.99 in Canada. The basic plan, which only allows subscribers to stream on one screen, is rising in the U.S. by $1 to $9.99 per month while the premium plan is increasing by $2 to $19.99 per month.
As Netflix transitioned from a DVD shipping service to a streaming platform in the 2000s, the price of a standard plan was $8 — it remained that way for many years until the platform raised it for the first time in 2017.
The rising prices, the company said, will be used to help Netflix provide more original programming and interesting content at a time when viewers have more and more options on different platforms.
"We understand people have more entertainment choices than ever and we’re committed to delivering an even better experience for our members," a Netflix spokesperson told TheStreet in a statement.
"We’re updating our prices so that we can continue to offer a wide variety of quality entertainment options," the Netflix spokesperson said. "As always we offer a range of plans so members can pick a price that works for their budget."
What Does This Mean For The Market ?
Netflix's price hike comes at a time when its competitors are increasing their budget dedicated to original content.
Last week, the WarnerMedia-owned HBO Max announced that it was putting $18 billion into new content creation in 2022. While Netflix has a lot more subscribers (214 million compared to HBO Max's 78 million), it only committed to spending $17 billion on content in 2022.
The price increases will, for existing customers, come into effect when they receive their next monthly bill while anyone who signs up as of today will need to pay the new prices. By contrast, HBO Max charges $14.99 a month while a Disney Plus subscription costs $8 a month or $80 a year.
While (NFLX) - Get Netflix, Inc. Report closed at $525.69 on Friday, shares rose slightly in after-hours trading after news broke — an indication, as some analysts said, that a commitment to strong content (Netflix has shows like "Cobra Kai" and "Queer Eye" while HBO Max boasts the wildly popular "Succession") will be what helps streaming companies stay competitive going forward.
"In our view, the original content released by Netflix in 4Q:21 was unprecedented and we believe this will encourage strong engagement," Monness Crespi Hardt analyst Brian J. White wrote in an investor note first seen by MarketWatch.
Netflix is due to release its fourth-quarter earnings on January 20.