Netflix is about to raise its prices for the first time in three years to help pay for more Internet video programming such as its popular political drama "House of Cards," according to Reuters.
The increase will happen sometime before July and will hike prices by $1 or $2 per month for new customers, Reuters reported.The 36 million current subscribers will continue to pay $8 per month for at least the next year.
Financial pressures have been mounting on Netflix as it grapples with the rising costs of licensing compelling video for its service, according to Reuters. The company has been spending more to compete against traditional cable-TV channels such as HBO and Showtime, as well as technology companies such as Amazon.com Inc., Hulu.com, Microsoft Corp. and Yahoo Inc., which are planning to buy more Internet video programming from Hollywood studios.
Amazon recently raised the price of its Prime service, which includes an expanding Internet video library, from $79 to $99 annually, Reuters reported.
Price increases pose a risk for Netflix as it lost about 800,000 subscribers after the 2011 pricing change was announced, rattling investors so much that the company's stock plunged more than 80 percent before starting to rebound in August 2012, according to Reuters.
The company ended March with 35.7 million Internet video subscribers in the U.S. after adding another 2.25 million customers in the country during the first quarter, Reuters reported. The company attracted another 1.75 million subscribers in Canada and overseas, leaving it with 12.7 million international customers.
On the contrary to the streaming service, Netflix's DVD-by-mail service is slowly dying, according to Reuters. Netflix had 6.7 million DVD customers in March, a 52 percent drop from 13.9 million just two years ago and Netflix isn't changing its DVD prices, despite rising postal costs.
Netflix's high rise in popularity can be attributed to the company's increasing emphasis on exclusive programming such as "House of Cards," an acclaimed series starring Kevin Spacey as a cunning politician with a ruthless plan to become President of the United States, Reuters reported. Netflix released all 13 episodes in "House of Cards'" second season on Feb. 14, midway through the first quarter.
