Netflix will raise prices for its US subscribers starting Thursday, the company confirmed to Business Insider.
The price of the lowest-tier plan will not change from $US7.99 monthly. But the most popular, the “standard plan,” which allows HD and two simultaneous streams, will increase to $US10.99 a month from $US9.99.
The highest-tier plan, which supports features like 4K video resolution and four simultaneous streams, will increase to $US13.99 a month from $US11.99.
Mashable first reported the price increase.
New subscribers will see the price increase go into effect on Thursday. Current subscribers will start being notified on October 19, and it will take effect in their next billing cycle.
Netflix’s price increases always spark drama.
In October 2015, Netflix raised its prices for new members and then embarked on a process of “un-grandfathering” existing customers into new prices. When the bulk of that process happened last year, media and public chatter rose to such a degree that Netflix blamed it for a missed quarter of subscriber growth.
“People don’t like price increases — we know that,” CEO Reed Hastings said on an earnings call last year.
People may not like them, but price increases will most likely continue to be necessary as Netflix spends more and more on content — close to $US7 billion next year, according to its content boss, Ted Sarandos. Funding its original productions is not cheap, and Netflix has made big moves recently, like poaching the TV power player Shonda Rhimes from ABC and buying the comic-book publisher Millarworld.
Still, despite the price increase, Netflix will remain a much better deal than cable in terms of viewing time.
In a report this summer, UBS analysts found that an average pay-TV package cost over three times as much per hour of viewing as Netflix. The per-hour cost of traditional packages was about $US0.42, while that of Netflix was about $US0.10.
That lead is not likely to be hurt too much by a $US1 or $US2 price increase.
Here’s a chart from UBS that shows how Netflix prices have fared relative to cable prices over time:
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