Streaming giant Netflix is raising its prices in the U.S.
The service will increase the cost of its standard plan by $1 from $13 a month to $14 a month. Its premium tier will cost $2 more a month, going from $16 a month to $18 a month. The service’s basic plan will remain priced at $9 a month.
The price hike is already in place for new Netflix subscribers as of Thursday. Current subscribers will be notified ahead of their next billing cycle.
“We understand people have more entertainment choices than ever, and we’re committed to delivering an even better experience for our members,” a Netflix spokesperson said. “We’re updating our prices so that we can continue to offer more variety of TV shows and films—in addition to our great fall line-up. As always, we offer a range of plans so that people can pick a price that works best for their budget.”
Investors have been needling Netflix about price hikes for the last several quarters as subscriber growth has surged due to the pandemic’s effects on demand for at-home entertainment. Last week, the streamer reported a slowdown in growth after two back-to-back quarters of higher-than-expected subscriber growth. In the third quarter, Netflix had more than 195 million global subscribers, including more than 73 million in the U.S. and Canada. The company expects to clear 200 million subscribers by the end of the year.
Netflix last raised its prices in January 2019, taking a similar $1-2 increase across its plan tiers, and analysts have indicated that another price hike was overdue. Netflix has been upping its spending on originals and was on track to spend an estimated $17 billion on programming this year.
The company’s own executives have said that price hikes are periodically necessary. Earlier this year, Netflix chief financial officer Spencer Neumann said the company would eventually increase prices to keep customers satisfied with the programming on the service.
“We start with the consumer, start with delivering that member satisfaction and increasing viewer satisfaction over time, and we think over time we can increase and drive what we think is a great virtuous cycle,” he said at the Morgan Stanley Technology, Media and Telecom Conference.
During Netflix’s most recent earnings call, chief operating officer and chief product officer Greg Peters also made note of the “virtuous cycle” when answering a question about recent price increases in Canada and Australia.
“The core model we have, and what we think really our responsibility and our job is, is to take the money that our members give us every month and invest that as judiciously, as smartly as we can in creating new amazing stories … basically delivering more value for our members, better product experiences,” Peters said. “And if we do that well, … we will deliver more value to our members and we’ll occasionally go back and ask those members to pay a little bit more to keep that virtuous cycle of investment and value creation going.”
But it also comes as Netflix is facing more competitors than ever, including streamers HBO Max, Peacock, Disney+ and Hulu, all of which are trying to win over consumers’ pocketbooks. HBO Max costs $15, Disney+ costs $7 a month, and Hulu begins at $7 a month (or $12 a month without ads). NBCUniversal streamer Peacock, which this morning had more than 22 million signups, starts at free and goes up to $10 a month.