Netflix raising U.S. prices, standard plan to top $15 a month

First price increase for North America since October of 2020 arrives as Netflix is expected to disappoint on subscriber growth in coming earnings report, stock jumped Friday after news hits

Netflix Inc. faces increased competition in the streaming sphere.

Getty Images

Netflix Inc. plans to raise its rates for streaming subscriptions in the U.S. and Canada for the second time during the COVID-19 pandemic, which led to huge early subscriber growth for the company that slowed down in 2021.

Netflix’s NFLX website was updated with new price listings Friday. The standard plan in the U.S., which allows two streams at high-definition quality, will now cost $15.49 a month, up from $13.99 a month. The two other main U.S. subscription plans increased as well, with the basic plan moving to $9.99 from $8.99 and the Premium plan increasing to $19.99 from $17.99. In Canada, the standard plan will reportedly increase to C$16.49 from C$14.99.

“We’re updating our prices so that we can continue to offer a wide variety of quality entertainment options,” a Netflix spokesperson said in a statement. 

The company, which spent $17 billion on programming in 2021, has not disclosed how much it intends to spend this year.

Netflix previously raised prices in October 2020, pushing the standard plan from $12.99 to $13.99 and the premium plan, which allows for up to four concurrent streams, to $17.99 from $15.99. That increase happened just as subscriber growth began to slow down for Netflix, after the company added more than 25.8 million net new subscribers in the first half of 2020, when the pandemic first struck and led to a wave of shelter-in-place orders.

For more: Your streaming subscriptions reshaped Disney and turbocharged Netflix — now comes making more money off you

In the full year after that explosion, from mid-2020 to mid-2021, Netflix attracted fewer than 17 million net new subscribers and fewer than 1 million on a net basis in North America. The company has been leaning on international markets for growth, even slashing prices in India, where competition with Amazon.com Inc. AMZN and Walt Disney Co. DIS is fierce.

Netflix executives’ forecast for the holiday quarter called for 8.5 million net new subscribers, but some analysts believe that projection was too optimistic. The streaming service is scheduled to report fourth-quarter earnings on Thursday, Jan. 27.

Netflix shares received a warm response to news of the higher consumer prices, jumping from around $515 a share to more than $530 at noon Pacific time, when Reuters published the news; shares closed at $525.69, a 1.3% gain on the day. The stock has struggled under the weight of declining subscriber growth, gaining 5% in the past year as the S&P 500 index SPX increased 22.8%.

In a note late Friday, Stifel analyst Scott Devitt said he remains “optimistic” on Netflix’s ability “to execute on price increases in more mature markets as broad utilization of pricing power continues to offset subscriber growth in lower [average revenue per paying user] international markets.”