Netflix Raises US Subscription Prices for New and Existing Customers

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"This price increase will likely be a revenue growth catalyst for the company", RBC Capital Markets analyst Mark Mahaney wrote in a client note.

Netflix has treaded lightly with price increases since 2011, when it suddenly hiked prices 60% for streaming and DVD-by-mail subscribers. Current subscribers will be notified starting on October 19, and then will become effective at the start of their next bill cycle.

On Thursday, it emerged that Netflix would be increasing the prices for its subscription services, and investors seemed to love it.

There will be no change to its basic so-called "one single screen" subscription which is €7.99 a month. Pachter based his estimates on the approximately 50 million Netflix subscribers in the US, along with revenue from new subscribers who sign up next year.

Netflix prices are going up in the United States and overseas.

The higher pricing comes as the video streaming service spends heavily on original content and expanding outside the US.

Netflix's most popular plan is the Standard streaming plan which allows users to watch different shows on up to two screens in high definition.

The entertainment giant has increased the price on two of the three subscription tiers offered to its 52 million United States subscribers. In fact, in 2016 alone, the company spent $6 billion on over 600 hours of both original programming and acquisitions. "However, we believe the other view must also be weighed - did something change to force Netflix to play defense?" "I don't think we'll see an immediate impact (on Netflix subscriber numbers), but this could affect subscriber growth in the first or second quarters (next year) for Netflix". "Further, we expect less speculation this time as to what the price increase means for future content spending given 2018 has already been indicated at +$1b Y/Y", wrote Mitchelson in a research note.

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