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Netflix announces price hike despite bumper profits

New customers to see a 'one to two dollar' increase
Tue Apr 22 2014, 10:11

kevin-spaceyTV AND FILM STREAMING SERVICE Netflix announced plans to raise its prices for new customers on Monday, despite raking in bumper first quarter profits.

During its first quarter earnings call on Monday, Netflix revealed that it plans to increase its monthly subscription fee by "$1 to $2" for new customers, in order to acquire more television shows and films. Netflix added that the price hike will take effect later this quarter, and will only apply in selected countries.

Netflix CEO Reed Hastings said, "We will be able to license much more content and deliver it in very high quality video."

This impending price hike comes despite a rise in profits for the streaming outfit, with Netflix financial results trumping analyst expectations. The firm saw revenues of $1.27bn for the three months ending in March and announced that net income was up $3m compared to last year at $53m.

Netflix announced that its US customer numbers grew 2.25 million, taking its total number of US subscribers to 35.7 million. In international markets its customer base reached 12.7 million, a gain of 1.8 million during the quarter.

Netflix credited this growth to its focus on original programming, citing House of Cards, reportedly the most-watched Netflix show ever, and Orange is the New Black.

Hastings said, "Original series represent a tremendous opportunity to raise awareness of, and build consumer enthusiasm for, the Netflix brand. We'll be investing more in marketing high-quality exclusive content and spending less on direct-response advertising such as banner ads touting free trials."

During its earnings call, Netflix also took the opportunity to oppose Comcast's planned buyout of Time Warner, after it recently signed a deal to pay fees to Comcast in order to improve the delivery of its shows.

Netflix said, "Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix.

"The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers." µ

 

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