Netflix Raising Prices by $1 or $2 a Month for New Subscribers

Image: Netflix Raising Prices by $1 or $2 a Month for New Subscribers

Tuesday, 22 Apr 2014 01:28 PM

By Michael Mullins

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Netflix is raising its prices for new subscribers — the first such increase in three years — in an apparent attempt to raise money for more programming, such as the popular series "House of Cards," while also combatting the rising costs of licensing agreements.

The increase will likely be in the form of a $1 or $2 per month price hike for new subscribers and will occur before July, Netflix CEO Reed Hastings told The Associated Press.

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"When we look at the shows and movies that we will be able to get if we have a bigger budget, it's exciting," Hastings said. "We want to make the service better and better so more people will join."

According to the company, the nearly 36 million current Netflix subscribers will not be affected by the increase and will continue to pay their $7.99 monthly rate for the next 12 months.

In addition to using more funds for program development, Netflix has also been under pressure to raise more money to counter the ever increasing licensing agreements to air popular shows and movies.

After announcing its plans, Netflix's stock surged 6.6 percent, or $23.01, to $371.50 in extended trading Monday, the AP noted.

Net income for the first quarter reached $53 million, an increase from $3 million a year earlier.

In addition to U.S. subscribers, Netflix is expected to expand to France and Germany in the second half of 2014. The company currently operates in 41 countries from which it reportedly gets about a quarter of its revenue.

In addition to announcing a future subscription fee increase, Netflix also proclaimed its opposition to Time Warner Cable's proposed merger with Comcast on Monday.

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The popular video streaming service is the most visible company with ties to Comcast to have voiced its concerns about the proposed $45.3 billion merger between the two largest U.S. cable companies.

"It's more in the public interest to either not have them merge or if the government goes ahead with it, to at least put some significant merger agreements, settlements in there," Hastings said in Monday's webcast.

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