For the first time since 2017, Netflix has been increasing its US prices, this year promoting a large debt-generating $ 13 billion investment in new movies, series and documentaries, as well-funded competitors appear in the content streaming business.
The rise in subscription prices, which represents a leap from 13% to 18%, will take effect immediately for new customers, but will gradually be phased in to existing subscribers over the next three months.
Wall Street welcomed this step by sending Netflix shares higher, as investors expect a faster income stream for the streaming giant. Stocks increased by 6.8% to $ 355.50, boosting the rupture, which has increased by 40% since December 24.
The streaming service, which accounts for 58 million subscribers in the US and has shaken the traditional model for both television and film, is convinced that subscribers will not be afraid of higher prices.
Netflix's previous subscription increase in 2017 was small or slow as Netflix added 24 million customers that year.
"We change the price from time to time because we continue to invest in great entertainment and improve the overall Netflix experience for our members," said Netflix on Tuesday in an email.
Under the new rules, Netflix's cheapest basic plan will cost $ 9 a month, starting at $ 8; its most popular HD standard plan will cost $ 13, starting at $ 11; and its 4K bonus plan will cost US $ 16, starting at $ 14.
The company is expected to announce strong growth on Thursday. It has gained recognition for its original works, including Stranger Things, The Crown, Bird Box and the current noise of Tidying Up With Marie Kondo, and it does not show signs.
However, the company has burned cash – just as much as $ 3 billion in 2018 – to cover the threat from Amazon, Disney and Apple, all new players in the streaming company who have promised substantial investment in the original content.
NBCUniversal, owned by Comcast on Monday, announced it would launch a new one
Streaming service in 2020 Disney is also scheduled to launch its Disney + service later this year.
If the analysts' predictions turn out to be correct, the effectiveness of the Netflix subscription model will be confirmed on Thursday when it announces 9.2 million new subscribers in the last three months of 2018.
It was also highlighted at the company's Golden Globe, where it won five awards, more than any other network or studio.
In a statement to investors, Goldman Sachs predicted that the results "will only be the beginning of Netflix's fastest spending and ever-stronger original layers", adding that "consensus still appreciates the financial impact of these dynamics".
UBS said Netflix "would achieve higher profits and a free cash flow than currently offered by the market" because its original content "demonstrates great success in the market".
But the new competition is likely to only increase the pressure on Netflix to increase efforts. Exponent Relationship Analyst Jeff Box recently predicted that the new talent for talent might end up in replication of the film studio's early years.
"It reminds me of Hollywood in the 1920s and 1930s, when the studios leased so many people to expand their content as soon as possible, because they had such a great appetite. You just wanted the content, it didn't matter what it was. That's what it takes for Netflix now. ”