Many American Netflix users will need to pay $1 extra for a subscription, the company announced Thursday, as the streaming giant deals with slowing U.S. growth after an explosion in new subscribers at the start of the Covid-19 pandemic.
A standard subscription now costs $14 a month rather than $13, and a premium plan (which allows users to stream content on more devices simultaneously) jumped from $16 to $18, though the company’s $9 basic standard-definition plan remains unchanged.
The price hikes will take effect immediately for new subscribers, and existing users will see their monthly bills increase over the next two months, with a warning 30 days ahead of time, a Netflix spokesperson told Forbes.
The company said it is raising prices to underwrite an expansion in original movies and shows.
Netflix last hiked its U.S. prices in January of 2019, boosting the cost of a standard plan from $11 to $13 per month.
73.08 million. That’s the total number of U.S. Netflix subscriptions as of last month, according to the company’s third quarter earnings report. Fewer than half of all Netflix subscribers live in the United States, the result of rapid international growth.
Netflix saw surging demand earlier this year, after the coronavirus closed most movie theaters and sent bored, homebound customers in search for entertainment. Almost 26 million new people worldwide subscribed to Netflix in the first half of 2020, the largest growth spurt in Netflix’s history, and the company rushed to add new shows at a rapid clip. This expansion stalled between July and September, when the company added just 2.2 million new subscribers, and Netflix expects growth to remain more modest for the next few months.
Netflix faces stiff competition from smaller streaming services, including longstanding rivals like Disney’s Hulu and newer services like Disney+ and NBCUniversal’s Peacock. Most of these services charge less than $10 per month, making Netflix a pricey option in a crowded market. Still, Netflix executives believe price increases will not slow their growth as long as the company continues adding enough new shows to justify the cost of a subscription.
“We understand people have more entertainment choices than ever and we’re committed to delivering an even better experience for our members,” Netflix spokesperson Katy Dormer told Forbes in an email. “We’re updating our prices so that we can continue to offer more variety of TV shows and films.”
-By Joe Walsh, Forbes Staff