The cost of creating blockbuster television like House Of Cards and Orange Is The New Black is starting to prove costly for the pay for streaming service, Netflix.
Although the company hasn’t pegged a date just yet, they have said that sometime this quarter they plan on increasing the price of their monthly subscription rate by $1 to $2. For the time being this rate hike will only affect new customers. They are reportedly giving existing customers a “generous period of time” before they up the cost.
“Over the last couple years we have been improving the content selection on Netflix and broadening it … If we want to continue to expand to do more great original content …we have to eventually increase prices a little bit,” Netflix CEO Reed Hastings said during a webcast to discuss the company’s earnings. In addition to helping to acquire “much more content,” the price increase would give the company more money to invest in its video-streaming technology, AdAge reported.
Manny analysts say that this news from Netflix is a result of Amazon’s new set top box and video streaming services along with services like HBO GO. Netflix’ CEO Reed Hastings says that those services are complimentary to Netflix and that their real competition comes from “…linear video”. This recent survey may dispute Hastings’ opinion.
Netflix has also said that they will be changing their advertising approach. The company plans to back down on free month trial offers and spend more marketing dollars promoting their exclusive television like House of Cards.
“Original series represent a tremendous opportunity to raise awareness of, and build consumer enthusiasm for, the Netflix brand,” the company said Monday. “We’ll be investing more in marketing high-quality exclusive content, and spending less on direct response advertising such as banner ads touting free trials.”
Netflix reported an uptick in customers to nearly 50 million worldwide with 35.7 million in the US alone. That fails in comparison to HBO though which has 130 million subscribers globally.
