Netflix Raises Monthly Price - Yamamoto International YMI

Tokyo, Japan, October 16, 2015 (Newswire.com) - ​YMI - Netflix, the video-streaming content provider, has announced that it will be raising the monthly subscription price of its most popular product by $1 citing escalating costs associated with the production of its original programming.

The Los Gatos, California-based  company responsible for hugely popular titles such as political thriller “House of Cards” and prison black comedy “Orange Is The New Black”, will introduce the increase immediately for new subscribers to its $8 a month product in the US, Canada and Latin America. Existing customers will get the increase too but they will not feel the effects until after May 2016.

Despite Netflix's popularity, it still regards the company's stock as overpriced and warns investors that when markets eventually decide to pay a little more attention to fundamentals, Netflix will likely face a sharp readjustment.

YMI Yamamoto International, Technology Analyst

The decision to stagger the introduction of price increases to existing subscribers is seen as an effort by Netflix to avoid the kind of backlash that greeted its decision in 2011 to hike the cost of its combined streaming content and DVD-by-mail service by up to 60%.

“That cost Netflix dearly,” said a YMI Yamamoto International technology sector analyst. “They lost 800,000 subscribers and nearly 80% of their share price because of that miscalculation so they’re keen to be seen to be rewarding subscriber loyalty,” she added.

The company’s appreciation of customer loyalty could not have come at a better time given the competition it now faces from relatively new entrants to the streaming market from HBO’s internet only version of its pay-tv service as well as from established rivals like Amazon’s Prime and Hulu.

YMI Yamamoto International says that despite Netflix’s popularity, it still regards the company’s stock as overpriced and warns investors that when markets eventually decide to pay a little more attention to fundamentals, Netflix will likely face a sharp readjustment.