Reasons Why Investors Love Netflix's New Price Hike

Reasons Why Investors Love Netflix's New Price Hike”

The price increases take effect over the next several months, Netflix says, with all subscribers will be notified at least 30 days in advance, based on their billing cycle.

The site already shows the updated prices and what features each plan grants users. But the most popular, the "standard plan", which allows HD and two simultaneous streams, will increase to $10.99 a month from $9.99. The library continues to shrink, only a handful of their growing library of original content is considered "must-watch", so a price increase now seems like poor timing.

Current subscribers (who have been spared from some rate increases in the past) will be affected this time.

The "Wrecking Ball" hitmaker - who rekindled her romance with the heartthrob previous year - has admitted her stomach churns when she learns that her handsome partner is working with lovely women on a new film, but she's happy not to ask too many questions because she has friends who keep an eye on him. The $14 Premium plan offers HD and 4K Ultra HD playback on up to four screens at the same time, along with support for HDR (high dynamic range) and Dolby Vision content on compatible displays.

Reported by Mashable, Netflix will be raising it's standard plan from $9.99 to $10.99 and its premium plan will go from $11.99 to $13.99 for USA customers. The plan that limits subscribers to one screen at a time with regular definition viewing remains $7.99 a month.

"We would expect [Netflix management] would be unlikely to implement such a price increase if USA subscriber trends were disappointing, bolstering our confidence further" that subscriber cancellations will be minimal, Mitchelson wrote in a research note.

It will be the first time Netflix has implemented a price increase since October 2015.

Netflix had earlier said it would spend over $6 billion this year on original shows and expected to have negative free cash flow of $2 billion to $2.5 billion.

Netflix shares surged on Thursday by over 4 percent, marking it the highest intraday record.

RBC Capital Markets analyst Mark Mahaney believes Netflix's programming lineup is so compelling that the service could charge even higher prices and still retain most of its audience. Every Netflix subscriber in the USA will be subject to the higher price point.

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