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Netflix Raises Prices For New Subscribers

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Netflix is about to raise its prices for the first time in three years.   (Source: CBS)

Netflix is about to raise its prices for the first time in three years. (Source: CBS)

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SAN FRANCISCO (CBSMiami/AP) — Netflix is raising  prices for new subscribers of their online videos, while old customers are catching a break.

The company will raise the prices by $1 per month, but current subscribers will not have to pay the higher rate for two years .

The changes mean anyone signing up for Netflix’s video subscription service beginning Friday will pay $9 per month for in the U.S. The old price of $8 per month will continue until May 2016 for Netflix’s existing 36 million U.S. subscribers.

The price increase, Netflix’s first in nearly three years, isn’t surprise. The Los Gatos, California-based company disclosed its plans to raise its rates last month without specifying the precise amount.

Netflix Inc. say its needs more money so it can afford to pay for more original programming along the lines of its Emmy award-winning political drama “House of Cards.”

By delaying the price increase for current subscribers, Netflix hopes to avoid the backlash that it faced in 2011 when it raised its prices by as much as 60 percent.

The company lost about 800,000 customers within a few months in an exodus that alarmed investors, causing Netflix’s stock to plunge by more than 80 percent in a year. Netflix eventually lured back subscribers and revived its customer growth, lifting its stock to record highs earlier this year.

New customers can avoid the higher price if they are willing to settle for a little less clarity and flexibility. Netflix is also introducing a new $8 per month plan that will only show standard-definition video and limit viewership to just one screen.

Netflix normally offers high-definition video and allows subscribers to watch on up to two different screens. That means two people sharing the same subscription can simultaneously watch Netflix videos on different devices with high-speed Internet connections. The company already charges $12 per month for a subscription plan that allows video to be simultaneously streamed on four different screens.

Subscription prices also will be increasing by the equivalent of about $1 month in Netflix’s markets outside the U.S. The company ended March with nearly 13 million international customers in more than 40 countries.

Netflix shares edged up $2.21 to $323.87 in morning trading Friday. Its shares have fallen more than 12 percent so far this year.

TM and © Copyright 2014 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2014 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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