'%20x='0'%20y='0'%20height='100%25'%20width='100%25'%20%0A%20%20%20%20%20%20%20%20%20%20xlink%3Ahref='data:image/jpg;base64,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'%3E%3C/image%3E%3C/svg%3E)
On Friday, January 14, Netflix announced a fourth rise in its subscription model within five years. The streaming giant will be increasing the prices of their plans by $1.50 to $2 for U.S. and Canadian subscribers.
In the U.S., the streaming giant hiked the price of their standard HD plan from $13.99 to $15.49 and their Premium 4K plan from $17.99 to $19.99. Meanwhile, the standard non-HD plan for their US consumers was hiked by a dollar, to $9.99.
Similarly, in Canada, the firm increased the price of their standard plan to $16.49 (from $14.99), and their premium plan was raised to $20.99 (from $18.99). In contrast to the U.S., the basic plan's price was not hiked in Canada.
The reason behind Netflix’s price hikes in US and Canada
The U.S. and Canada account for over 35 percent of the firm’s global subscriber base, which explains why the price hikes are reflected in these regions first. A spokesperson for the streamer told Reuters:
“We’re updating our prices so that we can continue to offer a wide variety of quality entertainment options.”
The representative added:
“We understand people have more entertainment choices than ever and we’re committed to delivering an even better experience for our members.”
Netflix aims to spend around $17 billion in 2022 for content production. With no addition in new subscribers over the last year, investors may have had concerns over shelling out more investments. Price hikes in their U.S. and Canadian plans is expected to recover a fraction of production costs.
The firm’s data shows that they have around 74 million paying subscribers in the U.S. and Canada as of 2021. This translates to anywhere between $888 million to $1.776 billion extra revenue from the price hikes (excluding the base price). The additional revenue will somewhat help with the firm’s 2022 production budget.
Satisfying Wall Street investors
Another primary reason behind the price hike might be to please the company’s investors. According to Backlinko, last year, Netflix reportedly added only 5.5 million subscribers compared to 2020’s 36.57 million new subscribers. This projected an unsatisfactory growth rate for the investors.
The firm’s price hike to gratify the stock market fetched positive results on Friday, with their stocks peaking with a 3% rise in intraday trading. Its shares ended up settling with a 1.25 percent hike when the market closed.
USA Plans:
Canada Plans (in CAD):
Note: The price changes will be effective immediately for new subscribers. Meanwhile, existing subscription holders will have a 30-day window before they need to pay the new subscription cost.
With this hike in their North American plans, Netflix became the most expensive streaming service, surpassing HBO Max. Following this change, it remains to be seen if the streamer can add more new subscribers compared to 2021.
Their failure to attract new subscribers this year, combined with Disney Plus’ push in content production with over $33 billion budget, may lead to further hikes in 2023.
