Netflix announces US price hike
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Michelle Clancy
| 16 January 2019

Netflix is raising monthly fees for its US subscribers with prices for its popular standard plan, which allows streaming on two devices at the same time, will rise to $12.99 per month from $10.99.

The company added in a statement that the $7.99 single-device plan will go up to $8.99. The company’s top plan, which allows streaming on four screens in high definition, will increase to $15.99 from $13.99 per month. The increases represent a between 13% and 18% hike, and is the service’s first since 2017.

“It highlights that Netflix has pricing power and even after the increase it remains a very cheap entertainment alternative,” Pivotal Research Group analyst Jeff Wlodarczak told Reuters.

The price increases are meant to shore up margins; the streaming giant spent $8 billion in 2018 on content, while its debt continues to balloon: It is expected to have a debt level of $8.33 billion in 2018, up from $6.5 billion in 2017 from $3.36 billion in 2016.

“With Netflix frequently tapping the debt markets on several recent occasions, the price hike could help ease concerns with a growing deficit on free cash flow to fund a likely continued escalation in Netflix’s content spending, which likely topped $13 billion in 2018,” CFRA analyst Tuna Amobi told Reuters.