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Netflix's new price hike is biggest in company history

Netflix's subscription prices jump again, this time by up to 18%--and stocks are rallying

By Derek Strickland from Jan 15, 2019 @ 9:43 CST

Netflix is raising its prices once again to help pay for service costs and thwart competition from major broadcasters.

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Netflix announced all of its subscription plans will now cost more. The basic tier will increase from $8 to $9, the HD plan gets a steeper two dollar price increase from $11 to $13, and the 4K plan also jumps two dollars from its previous $14 to the new $16 rate. Existing subscribers will have their rates grandfathered for three months, but new subscribers must pay the full cost. Netflix stock has surged nearly 6% following the price hike.

The increase comes at a point where Netflix not only faces steep competition but as it focuses more strongly on exclusive movies and TV shows. The company plans to use earnings from the price jump to fund these new projects, which should transform it as a "Netflix channel" as major studios pull content to make their own respective streaming services.

Major broadcasters like CBS, NBC, HBO, and Disney are all readying or have already launched streaming services, ushering in a new era of fragmentation in a bid to eagerly follow Netflix's successful model.

NEWS SOURCES:Cnbc.com


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