Netflix has revealed its plans to increase its monthly subscription price by "one or two dollars" per month "depending on the country." The new pricing will be applied upon signup to new customers; meanwhile existing members will remain with their current price plans for "a generous time period."
The company reported that it now has more than 34-million paid subscribers in the U.S., with first-quarter profits of $54 million in tow. The latest set of financials showed gains from a year ago and beat Wall Street expectations. The proposed price increase has been welcomed by investors and the company's shares jumped 6.7 per cent in after-hours trading, to $371.97, after the plans were revealed.
The new price plan is expected to help fund investments in more original programming. Previous Netflix funded TV show examples include successful series such as 'House of Cards' and 'Orange Is the New Black.' The company's CEO Reed Hastings explained that the increased subscription price would also help Netflix "acquire more content and deliver an even better streaming experience."
Looking at the bigger picture Hastings said "We are approaching 50 million global members, but that is far short of HBO's 130 million". Hastings also stated that Netflix is "eager to close the gap," as he set himself this huge target. Netflix last announced a price hike back in 2011, then it was poorly received resulting in a plunging stock price and fleeing subscribers. CEO Hastings even had to apologise to members for the change.
The increase is expected to take place before July, while current U.S. members will continue to pay the $7.99 subscription for at least the next year, Hastings said in an interview, as reported by Phys.org.
Netflix opposes US cable merger
Netflix also recently opposed Comcast Corp's proposal to purchase Time Warner Cable Inc. This follows an unhappy agreement to pay 'interconnection' fees to Comcast back in March, for faster/smoother delivery of its media services to end users.
"Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix," the media streaming provider company said in its letter. "The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers."