In a surprising move Netflix has announced it will be raising its prices for new subscribers by July of this year.
Netflix CEO Reed Hastings announced Monday that the increase will be either $1 or $2 per month for new users.
Current subscribers are safe, at least for the next year and will continue to pay the $8 monthly fee.
Streaming television has become a booming business, with everyone from Apple to Amazon entering this ever-growing field.
Netflix, one of the giants in this area has been struggling to stay profitable due to the increase in licencing and the loss of customers due to the ever-expanding market.
It has recently become profitable again by offering exclusive programs, like ‘Orange is the New Black’ and ‘House of Cards’.
This price increase will help them to develop more of these original programs, allowing them to stay competitive and continue to increase profits.
Although this is welcome news for investors (stocks rose immediately following the price hike announcement), it may cause a consumer backlash again.
Back in 2011 the company’s profits and stocks took a nosedive in 2011 when it increased its prices.
With more and more option available to consumers, this move may ultimately do more harm than good.
News for Shoppers will continue to update you on this story and consumer reaction.
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