Netflix raises subscriber prices before profits

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Netflix (NFLX) stock rose slightly on Friday afternoon after the streaming platform raised the price of its subscriptions by $1 to $2.

Netflix’s basic plan in the US has increased by $1 to $9.99 per month. The standard US subscription now costs $15.49 per month, up from $13.99 previously. Netflix’s premium plan has gone from $17.99 to $19.99 per month. The increase was first reported by Reuters.

The company will release its fourth quarter results on January 20.

“We understand that people have more entertainment choices than ever before and we are committed to providing an even better experience for our members,” a Netflix spokesperson told Reuters.

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The price increases were not announced in advance, although analysts noted price elasticity with respect to Netflix subscribers amid stiff competition in streaming and a slowdown in the user base as the pandemic ends.

Netflix’s subscriber additions in the third quarter of 2021 rebounded from the previous three-month period, thanks in part to a strong slate of content, including hit Korean TV show “Squid Game.” A record 142 million people watched the show in its first four weeks.

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The Netflix logo displayed on a phone screen and laptop keyboard are seen in this illustration photo taken in Krakow, Poland on January 7, 2022. (Photo by Jakub Porzycki/NurPhoto via Getty Images)

The company saw slower subscriber growth in the first two quarters of last year, adding just 5.5 million total net subscribers, far fewer new users than the all-time high of 25.9 million additions in the first half of 2020.

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During the company’s latest earnings report, the company said it would switch to reporting hours watched for its shows instead of counts viewed.

Regarding the price change, the Netflix website states, “These prices apply to new members and will gradually take effect for all current members. Current members will receive an email notification 30 days prior to the price change, unless they change their package.”

Shares of Netflix are down 11% year-to-date as investors recently dumped tech and growth stocks on the prospect of higher interest rates later this year.

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