Netflix to raise prices
The battle between cable TV programmers like Comcast and streaming providers like Netflix has just sharpened, with Netflix announcing a pretty steep price increase as it very publicly declared its opposition to Comcast’s planned acquisition of Time Warner’s cable operations.
As smart TVs, Wi-Fi and the proliferation of Internet-connected tablets and smartphones over fast 4g speeds has made streaming so convenient, Netflix seems to have finally found its groove, actually beating the profit predictions of the anayalists for the last quarter. Netflix reported a first-quarter profit of $53 million, or 86 cents a share, up from $3 million, or five cents a share, a year ago. Revenue jumped 24% to $1.27 billion. The company in January had projected a profit of 78 cents a share.
But in releasing it’s latest financials, Netflix announced announced plans to raise prices by $1-2 per month, initially for new customers but eventually for everyone, “to acquire more content and deliver an even better streaming experience.”
Netflix has been charging $7.99 a month since 2011, sand says the price hikes are needed to keep producing high quality origina programming such as its critically acclaimed series “House of Cards” and “Orange Is the New Black.”
The company has spent billions of dollars in programming over the past few years and the result is that it is now the largest subscription programming service in the U.S., with 11.76 million paid subscribers – more even than such traditional cable TV channels like HBO.
Meanwhile, its opposition to the Comcast expansion was vocal and sharp, even though it pays Comcast to connect Netflix streaming service to the Comcast network. Netflix said it opposes the deal because it would give Comcast “anticompetitive leverage” because its systems would pass 60% of homes that take broadband Internet-access.
“”I don’t know that we want anybody to control half of the U.S. Internet,” Netflix Chief Executive Reed Hastings told analysts in a video conference call to announce the latest earnings report and the coming price hike.
The price increase will vary from country to country, said Netflix. At first it will effect only new customers but it will eventually be passed on to all customers.
There’s sure to be a lot of griping from consumers over the increased costs. But the service really has improved over the past few years. Besides, I’m hooked on “House of Cards. ” I’d gladly pay a buck more a month if it would help them get out season three before 2015.