Netflix to raise its price for new customers
Video streaming service Netflix Inc said it intends to raise its subscription price for new customers by $1 or $2 a month to help the company buy more movies and TV shows and improve service for its 48 million global subscribers.
Investors welcomed the announcement, which had suffered from a consumer exodus and stock plunge after it announced an unpopular price increase in July 2011. The company's shares jumped 6.7 percent in after-hours trading to $371.97, after the company released plans for price hikes and posted a rise in first-quarter profit that beat Wall Street expectations.
Chief Executive Reed Hastings said Netflix had improved its selection of TV shows and movies and added original series like critically acclaimed Kevin Spacey thriller "House of Cards."
With added revenue from higher prices, "we will be able to license much more content and deliver it in very high quality video," Hastings said on a webcast.
The company, in a quarterly letter to shareholders, said it plans to impose "a one or two dollar increase, depending on the country, later this quarter for new members only."
Subscription fees will rise in each of the 41 countries where Netflix operates, Hastings said in an interview. Existing customers will keep their current price for one to two years, he said.
Netflix is investing in original series, such as "House of Cards" and "Orange is the New Black" to attract and keep subscribers. If faces competition from online video players like Amazon.com Inc and Hulu, as well as on-demand content from cable operators.