We’re all gonna pay for Bird Box, one way or another. Netflix announced today that it is raising its subscription prices by 13% to 18% for its 58 million U.S. subscribers, the steepest price increase since the company’s streaming service launched 12 years ago. The new prices go into effect immediately for new subscribers and will be phased in for existing subscribers over a three-month period.
Those who subscribe to the Basic plan will see their cost rise from $8 to $9, while the streaming service’s most popular option, HD Standard, will go up in price $2, from $11 a month to $13. The most expensive plan, 4K Premium, is going from $14 to $16. Customers in about 40 Latin American countries where Netflix uses U.S. currency will also be affected by the price increase.
The move comes on the heels of the buzzworthy success of the Netflix original film Bird Box, which they tout as their most watched original film yet—although that remains unverified as Netflix refuses to release viewer data. The price increase also comes as the streaming service is almost certainly about to land its first Best Picture Oscar nomination for Alfonso Cuarón’s Roma, which is also in line to win a number of Oscars next month. In short, prices are increasing just as Netflix is becoming both more prestigious and more “essential” than ever.
Netflix smartly raises prices a little bit at a time, so $1 here or $2 there doesn’t seem too significant. The streaming service remains the juggernaut of the streaming industry as it’s gearing up to produce even more exciting original content in 2019, from new movies from filmmakers like Martin Scorsese and Michael Bay to new seasons of popular series like Stranger Things and Mindhunter.
The price increase is also likely strategic, as 2019 will bring the biggest streaming competition Netflix has ever seen. Disney and WarnerMedia are planning on launching their own streaming services by the end of the year, and Apple is also getting into the fight although their timetable is being kept under wraps. Disney brings with it live-action Star Wars and Marvel series and Apple has roped in its own A-list talent, but Netflix remains king when it comes to quantity, having shored up a tremendous amount of original content over the past couple of years.
If these other competitors do drive business away from Netflix, it’ll be interesting to see if they raise their prices even higher. The streaming service remains in debt, with an annual spend north of $12 billion, but the idea behind this strategy is to then slowly ramp down production of original content after an extensive library has been amassed. If this strategy backfires it’ll trigger a monumental meltdown, but thus far Wall Street is bullish on Netflix’s prospects. The company’s stock soared in response to the price increase news.
How much is too much for Netflix? Or are you in this for the long haul having already cut the cable cord? Sound off in the comments below.
And if you’re still confused by Netflix’s business model, check out this excellent explainer video from The Ringer below.