Netflix is raising its North American monthly price by $1.50 on its most widely used subscription VOD option to $15.49 -- its first price increase for the U.S. and Canada since October 2020.
The two-screen HD "standard" plan will be sent to existing users gradually. Customers will get a 30-day notice of the price hike from the current $13.99. For new customers, the higher prices will take effect immediately.
Netflix’s "basic" standard definition/one-screen option will go to $9.99 (from $8.99) and its "premium" 4K/four-screen service up $2.00 to $17.99 (from $19.99).
Michael Pachter, media analyst for Wedbush Securities, speaking to CNBC on Friday, says the increases will give the big subscription video on demand service the ability to cement its efforts in getting to an annual consistent positive cash flow.
In addition, he believes this represents a consumer value adjustment to other competitors such HBO Max, which is the most expensive of the premium streamers at $14.99 a month. Netflix produces more original content for streaming than many other streaming platforms.
But there is the flipside to this. “Churn [of subscribers] could pick up because now they are more expensive than HBO Max,” he says.
Overall, Pachter estimates this means about $2.5 billion more to spend on content per year. Netflix had said it would spend $17 billion on programming in 2021. The company has not disclosed spending for 2022.
With around 74 million North American subscribers, and slowing U.S./Canada growth over the last two years or so, Pachter believes: “This is a signal they are done growing in the U.S.”