Netflix is raising its Internet video prices by $1 per month for new customers and giving its current U.S. subscribers a two-year break from the higher rates.
The changes mean anyone signing up for Netflix’s video-subscription service beginning Friday will pay $9 per month in the U.S. The old price of $8 per month will continue until May 2016 for Netflix’s existing 36 million U.S. subscribers.
The price increase, Netflix’s first in nearly three years, isn’t a surprise. The Los Gatos, Calif.-based company disclosed its plans to raise its rates last month without specifying the precise amount.
Netflix Inc. says it needs more money so it can afford to pay for more original programming along the lines of its Emmy award-winning political drama “House of Cards” and critically acclaimed series “Orange Is the New Black.” The emphasis on video that can be seen only on Netflix has become a major drawing card for the company as it strives to create the Internet’s equivalent of Time Warner Inc.’s HBO cable network.
By delaying the price increase for current subscribers, Netflix hopes to avoid the backlash that it faced in 2011 when it raised its prices by as much as 60 percent.
The company lost about 800,000 customers within a few months in an exodus that alarmed investors, causing Netflix’s stock to plunge by more than 80 percent in a year. Netflix eventually lured back subscribers and revived its customer growth, lifting its stock to record highs earlier this year.
Netflix’s stock rose $2.65 to $324.31 in early afternoon trading Friday. The shares have fallen by 13 percent so far this year.