Netflix Raises Prices by $1 a Month for New Subscribers

Netflix Inc. (NFLX) raised prices for new subscribers by $1, to $8.99 a month, the first increase in three years for the video-streaming service that offers the series “House of Cards.”

As part of the change, the world’s largest subscription streaming service introduced a $7.99 plan that doesn’t deliver high-definition TV or let subscribers view programs on more than one device at a time, according to the Los Gatos, California-based company.

The move reflects Chief Executive Officer Reed Hastings’s acknowledgment last month that his rising budget for movies and TV shows would require higher prices. Existing customers will continue to pay the same price for another two years.

“To continue to add more movies and TV shows, we are increasing the price of our $7.99-a-month streaming plan by $1 to $8.99,” Netflix said in an e-mail.

The increase, amounting to almost 13 percent, is effective immediately worldwide, said Jonathan Friedland, a Netflix spokesman. The change may be greater in some countries because of currency effects, he said. Existing customers, in addition to avoiding the price increase for now, keep the ability to watch on two devices at once.

The new $7.99 plan was designed to help consumers who worry about mobile and home broadband data caps imposed by Internet service providers, Friedland said.

The limited plan, while appealing to price-conscious consumers who may not care about high-definition TV, could actually boost revenue for Netflix by prohibiting the sharing of accounts during peak viewing hours, analysts have said.

Multiple Streams

Netflix has also introduced a premium-priced plan for $11.99 that lets customers stream shows on as many as four devices at once.

Hastings said last month an increase would do little in the near term to raise revenue, since it wouldn’t initially include the current 48.4 million online subscribers.

The CEO had resisted some calls by investors to raise prices after running afoul of customers in 2011, when the company split its DVD-by-mail business from streaming and increased prices by 60 percent for customers who wanted both.

Since then, Netflix has invested in more exclusive content from studios such as Walt Disney Co. and DreamWorks Animation SKG Inc. (DWA), and in originals series such as “Orange Is The New Black” and “House of Cards.”

Netflix fell 0.2 percent to $320.93 at 11:17 a.m. in New York. The stock had declined 13 percent this year through yesterday.

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net Rob Golum, John Lear

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