Netflix is raising its prices for many of its U.S. subscribers.
Netflix is raising its prices and Wall Street is raising Netflix’s stock price
See how that works?
Netflix
Peter Kafka covered media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.
Great idea, says Wall Street, which is rewarding the streaming company by pushing its stock up some 4 percent this morning.
The details: Netflix is raising the price of its $9.99-a-month plan, which lets users stream on two devices simultaneously, to $10.99, and the price of its $11.99 plan, which offers up to four streams, to $13.99. The company’s entry-level $7.99 plan will stay the same.
The price hikes go into effect today for new subscribers. Current subscribers will get an email from the company this month and will start to see their rates go up in November.
Here’s the official line from Netflix: “From time to time, Netflix plans and pricing are adjusted as we add more exclusive TV shows and movies, introduce new product features and improve the overall Netflix experience to help members find something great to watch even faster.”
The writing has been on the wall for this one for some time: Netflix is spending more and more money on its own content — in part because Hollywood is pulling its own stuff off of Netflix — and is now looking at spending $7 billion on movies and TV shows in the next year.
Investors have been expecting to see a price hike for some time, but investors always love a chance to buy and sell Netflix stock, so Netflix stock is jumping anyway.
The only issue for Netflix will be the way it communicates the price hike to consumers, which has caused it problems in the past — like back in 2011, when it refused to say it was hiking prices, even though it was hiking prices, or in 2015, when it told consumers well in advance about a price hike, and then said that news scared off subscribers.
So this year’s strategy seems to be: Raise prices, say that’s what you’re doing, and get it over with quickly. Let’s see how that works.
This article originally appeared on Recode.net.
