Netflix’s stock is popping, along with the price of its subscriptions.
The company’s stock is up 2.69% to about $US189.53 on Thursday, following the news that Netflix will be increasing the price of its subscription services to help cover its increasing content production budget.
On Thursday, Mashable reported that Netflix will be raising the prices of its middle- and highest-tier plans for the US by $US1 and $US2 respectively. The previously priced $US9.99 plan will increase to $US10.99 and the premium tier will increase from $US11.99 to $US13.99, according to Mashable. Subscribers to the lowest, $US7.99 plan will not see an increase in price, according to Mashable’s report.
Netflix confirmed the price increase plan to Business Insider’s Nathan McAlone in a statement.
Netflix plans to roll out the price increase in November for existing subscribers and is set to publicly announce the price increase to customers later this month. Netflix told Mashable that it occasionally raises prices in order to add more content and features to the platform.
Netflix reported 51.92 million US streaming subscribers in its last earnings report. While the company doesn’t release details on the breakdown of those subscribers among the three plans, an average price increase of $US1 per subscriber (based on a $US0, $US1, and $US2 increase respectively for each of the three tiers) would mean an estimated $US623 million a year in additional revenue a year for Netflix.
The price increases come as the streaming video space is heating up. Big names in the movie and TV space are starting to pull their content into siloed streaming platforms, which place a higher importance on original content for companies like Netflix as licensed content moves to those proprietary sites and apps. Wall Street has regularly pointed to good original content as one of the biggest subscriber growth drivers for the company, and Netflix recently said it plans on spending $US7 billion on creating its own content next year.
Netflix is up 47.69% on Thursday.