Netflix raises prices on U.S. subscriptions as content spending grows

Netflix is raising the price of its monthly standard plan by $1.
Netflix is raising its prices on standard and premium subscription plans.
(Elise Amendola / Associated Press)

Netflix on Thursday said it is raising the prices of its U.S. standard and premium subscription plans, as the streamer continues to invest in content to differentiate itself from rivals.

The cost of its standard plan that allows for streaming on two screens will go up $1 to $13.99 a month, while the premium plan will increase by $2 to $17.99 a month for new customers. The price on the company’s basic plan will stay the same at $8.99 a month.

The higher prices will take effect immediately for new customers. Existing customers will be notified of the increase 30 days before it goes into effect. The last time Netflix instituted a U.S. price increase was January 2019.


“We’re updating our prices so that we can continue to offer more variety of TV shows and films — in addition to our great fall line up,” Netflix said in a statement. “As always we offer a range of plans so that people can pick a price that works best for their budget.”

Netflix subscriptions surged as the COVID-19 pandemic hit, but growth is slowing as businesses reopen and competition from streaming rivals rises.

Oct. 20, 2020

The price increase comes after Netflix missed its own projections for global subscriber growth last quarter. The company expected to add 2.5 million subscribers and instead added 2.2 million.

Netflix said it expects fewer subscribers to join in the second half of the year because of the unusually large number of people who signed up for the streaming service in the spring, as they sheltered at home during the pandemic.

The company said it added 28.1 million subscriptions in the first nine months of the year, compared with the 27.8 million subscriptions added last year.

Analysts had expected Netflix to raise prices to help fund more content and compete against a growing crop of rival streaming services. Some competitors have prices that are lower than Netflix’s cheapest plan, such as Disney+, which starts at $6.99 a month.

“With Netflix’s subscriber growth slowing down, a price increase was the most logical way for the company to increase revenue,” said Ross Benes, an analyst at research firm EMarketer, adding he believes Netflix is underpriced and has room for modest price increases.


“There will be some subscribers who cancel when prices rise, but the number who churn out will be relatively small, and over the long run, it will be outweighed by the additional revenue that comes from the price hike,” he said.

Netflix said that its price increase did not have anything to do with its recent earnings announcement.

The price increase was first reported by the Verge.

Netflix shares closed up $17.97, or 3.7%, to $504.21. They dipped slightly in after-hours trading.