Netflix to raise prices, says it opposes Comcast-TWC merger
Higher prices are the new black for Netflix.
The Los Gatos, Calif., streaming video company plans to raise prices for new customers by $1 or $2 a month this quarter, the company said Monday in its quarterly earnings release. Existing customers will continue to pay the current prices for “a generous time period,†the company said.
Access to the company’s streaming video library currently costs $7.99 a month for suscribers in the United States, and Netflix has been experimenting with pricing models as it spends to improve its selection of movies and television shows and builds out its slate of original content.
“Over the last couple years, we’ve been improving the content selection on Netflix,†Chief Executive Reed Hastings said in an interview webcast on YouTube. “We have to eventually increase prices a little bit.â€
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In January, the service raised prices for incoming subscribers in Ireland, allowing old customers to keep paying the lower fees for two years. The company said it “saw limited impact†from that increase.
Netflix has gained subscribers in the last year, partly thanks to its original programs such as the Kevin Spacey beltway drama “House of Cards,†which launched its second season in February. Season 2 of the darkly comic women’s prison series “Orange Is the New Black†is set to debut in June.
Netflix’s profit increased in the first quarter of the year as it added 2.25 million subscribers in the United States, bringing its total to 35.7 million.
The company reported profit of $53.1 million, or 86 cents a share, up from last year’s first quarter, when it earned $2.7 million, or 5 cents. Revenue grew 24% to $1.27 billion.
The company said it added 1.75 million subscribers overseas, bringing its international total to 12.7 million.
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Netflix also used its earnings release to explicitly come out against the proposed acquisition of Time Warner Cable Inc. by Comcast Corp.
The company said Comcast’s pending $45.2-billion acquisition of Time Warner Cable would give Comcast more leverage to charge more in fees from companies such as Netflix that rely on high-speed broadband.
“Comcast is already dominant enough to capture unprecedented fees from transit providers and services such as Netflix,†the streaming video firm said. “The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes this merger.â€
The opposition from Netflix is part of an ongoing battle over so-called net neutrality, the principle by which Internet service providers are expected to treat all Internet traffic equally rather than giving preferential treatment to specific content.
Comcast has promised to abide by net neutrality. Netflix agreed in February to pay Comcast to ensure that its movies and TV shows stream seamlessly.
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