While Netflix has become the default destination for tens of millions of binge watchers around the world, content licensing costs have continued to climb dramatically. Whereas streaming rights were once an afterthought, studios have come to see them as compelling revenue streams and are now pricing their shows and movies accordingly.
One result is that Netflix has to keep bumping up its subscription fees to keep the lights on, and a new set of prices goes into effect today for new customers, while current users will enjoy a 3-month delay. (Download Netflix for iOS or Android.)
The entry-level tier has gone from $9 to $10 a month, the middle tier has gone from $11 to $13, and the Premium tier is now $16, up from $14. This top tier is the only one that supplies Netflix in 4K and HDR, though you do get up to four simultaneous streams.
The cheapest tier is standard definition and limited to one stream, and the middle tier is high-definition and lets you have up to two streams at once.
As always, however, your first month of service is still an unlimited free trial, and all tiers permit downloading content within the mobile app for viewing offline. Though as with 4K and HDR, not all content will necessarily support that feature. But as a rule, Netflix's original shows are all downloadable in the app.
Why is Netflix raising its streaming prices?
According to the Associated Press, Netflix faces higher production costs as well as higher licensing fees, because content creators are encountering an increasingly varied marketplace for their work. This means more competition for what they can make, and the rules of supply and demand say that they can charge higher prices if more streaming services are lining up to buy.
Since Netflix launched about a decade ago, we have seen the rise of Hulu, Amazon Prime Video, HBO Now, YouTube Premium and CBS All Access -- and each of these alternatives is producing award-winning original content. (Disclosure: CBS and Download.com are owned by the same parent company.)
FOLLOW Download.com on Twitter for all the latest app news.
With higher prices for content no matter how it's obtained, Netflix may have no other choice but to raise prices. According to the Associated Press, the company has accumulated about $14 billion in debt. However, its stock still trades at hundreds of dollars per share, and the price went up 6.5 percent on the news of Netflix's higher subscription prices.
As with Amazon, debt isn't necessarily a bad thing if you demonstrate that your net loss is due to habitual reinvestment, rather than mismanagement or other preventable errors.
Amazon has ridden this concept to become one of the most valuable companies in the world, as measured by its market capitalization (which is the price of a share multiplied by the number of shares available). Investors apparently see the same pattern with Netflix, so as long as they keep buying, the streaming service should keep on trucking, despite the red ink.
- Netflix has announced that it's bumping up the prices of all three of its streaming plans; the $8 per month plan is now $9 per month, the $11 per month plan is now $13 per month , and the $14 per month plan is now $16 per month.
- While this pricing is effective immediately for new subscribers, current subscribers will get a three-month grace period before they see the price increase.
- NBCUniversal announces Netflix and Hulu competitor launching in early 2020
- Apple Music now requires family account to get multiple streams
- YouTube on Android and iOS now lets you swipe right to the next video
- Netflix Marie Kondo series inspires internet to come clean (CNET)
- Netflix leads the most successful Facebook brands in 2018 (ZDNet)
- New survey reveals the no. 1 company techies want to work for (TechRepublic)