Netflix raises prices in US to help pay for its productions
Share price rises on news that cost of most popular US service plan is to increase by 10%
Netflix show Orange Is the New Black
Netflix Inc is raising the price of its most popular service plan in the US by 10 per cent as the streaming video giant looks to help pay for its ambitious budget for TV shows and movies.
Netflix shares surged as much as 4.5 percent to an intraday record, a sign that investors are confident the streaming video giant can keep expanding its subscriber base even with a higher price.
The company’s most popular plan rose to $11 a month from $10, while its high-end plan rose to $14 from $12. Both offer high-definition viewing and let families watch on multiple screens. The basic $8 plan will stay the same. The company will begin notifying current subscribers on October 19th and roll out the price hike over several months.
Netflix is spending $6 billion on programming this year, and will increase that to $7 billion next year. The company has declined to set a cap on how much it will spend to lure viewers away from other TV networks, and chief financial officer David Wells has suggested it may soon spend $20 million on a single episode of TV.