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Netflix raises prices for U.S. subscribers again, across all tiers

Netflix raises prices for U.S. subscribers again, across all tiers
The Netflix price increase will bring in more cash as the company spends heavily on content. (Matt Rourke / Associated Press)

Netflix is kicking off 2019 with higher subscription prices for its U.S. customers, with the most popular plan rising to $12.99 a month from $10.99.

The streaming service is hiking prices 13% to 18% across all three of its subscription tiers. The price of the most expensive plan, which offers Ultra HD picture, is rising to $15.99 a month from $13.99.

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The least expensive plan will now cost $8.99 a month, up from $7.99.

Netflix said Tuesday the changes would be applied to all new members immediately and to all existing members over the next few months. The Los Gatos, Calif., company reported that it had 58 million U.S. subscribers as of the end of the third quarter in September.

Netflix says existing members will be notified by email and within the Netflix app 30 days before the new prices are applied to them. The exact timing will depend on the specific member’s billing cycle, according to the company.

In addition to U.S. customers, the new prices also will apply to subscribers in Latin America and the Caribbean where Netflix bills in U.S. dollars, such as Uruguay, Barbados and Belize. That excludes major markets such as Mexico and Brazil.

This marks the fourth time the company has raised its subscription prices. The last time was in October 2017, but at that time the price of its least expensive subscription was unchanged.

“We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience for the benefit of our members,” a company spokesperson said in a statement on Tuesday.

For Netflix, the price increase will bring in more cash as the streaming giant continues to spend heavily on content. Last year, the company was expected to spend as much as $15 billion on original and licensed shows and movies.

To fund its programming, Netflix has borrowed heavily, saying it’s taking advantage of favorable interest rates. The company’s long-term debt exceeded $8 billion in the third quarter.

Much of Netflix’s spending is going toward original content, such as the series “Stranger Things” and recent movie “Bird Box,” as the company seeks to lessen its dependence on licensed shows.

As a result, Netflix has been burning through cash. For 2018, it expects negative cash flow of about $3 billion. The company recently hired a new chief financial officer — Spencer Neumann, from Activision Blizzard.

Netflix still offers cheaper options than some other popular streaming services. A subscription for HBO Now goes for $14.99 a month. Hulu without commercials is $11.99 a month.

Amazon Prime raised its annual subscription price last year to $119 from $99. In addition to streaming entertainment, a Prime subscription gives customers free two-day shipping on Amazon orders, among other benefits.

Shares of Netflix were up more than 6% during the day Tuesday following the announcement.

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