Netflix Hikes Prices Up To 18% For 58 Million US Subscribers
For the fourth time in its history (the last hike came in 2017), Netflix is raising prices – this time by 13-18% – its biggest price-hike since launching 12 years ago.
AP reports that Netflix’s most popular plan will see the largest hike, to $13 per month from $11. That option offers high-definition streaming on up to two different internet-connected devices simultaneously. The price for the cheapest plan is going up to $9 per month. A premium plan offering ultra-high definition will jump to $16 per month from $14.
Even at the higher price, that plan is still a few dollars cheaper than HBO, whose streaming service charges $15 per month, but Amazon offers a streaming service as part of its Prime shipping program for $13 per month.
This is the first time that higher prices will hit all 58 million U.S. subscribers
The new prices will immediately affect all new subscribers and then roll out to existing customers during the next three months.
“We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience,” the company said in a statement.
The stock is up on this news – surging 6% ahead of the open – as it seems the market believes Netflix viewers are entirely price inelastic…
Additionally, this price-hike comes as the company burned through about $3 billion last year and is expecting to do so again this year. To offset the negative cash flow, Netflix has been borrowing heavily to pay for programming. accumulating nearly $12 billion in debt before borrowing another $2 billion in an October bond offering.
NFLX is now up 30% year-to-date…
We’ll see, as the economy slows.
Raising prices into an economic slowdown worked out great for Apple
— zerohedge (@zerohedge) January 15, 2019
And here is the one number that everyone on Wall Street will desperately struggle to avoid mentioning today: in Q3, Netflix burned a record $859 million in cash, or about 10 million per day in the third quarter.
Which leads to the next question: how much will Netflix spend on programming next year, While the company did not address this, it did say it has spent $6.9 billion so far this year. That means the company is on pace to surpass its previous forecast (of $7 billion to $8 billion). And, we note that 3Q streaming content obligations were $18.6 billion.
How long til prices hit $100 / month?
This article appeared at ZeroHedge.com at: https://www.zerohedge.com/news/2019-01-15/netflix-hikes-prices-18-58-million-us-subscribers