Netflix’s ‘Orange’ brings green
SAN FRANCISCO— Netflix is preparing a sequel unlikely to be a hit with its subscribers. The Internet video service is about to raise its prices for the first time in three years to help pay for more Internet programming, such as “Orange Is The New Black” and its popular political drama “House of Cards.”
The increase, to take place before July, will hike prices by $1 or $2 per month for new customers. The company’s nearly 36 million current subscribers will continue to pay $8 per month for the next year, Netflix CEO Reed Hastings said in a Monday interview.
“When we look at the shows and movies that we will be able to get if we have a bigger budget, it’s exciting,” Hastings told The Associated Press. “We want to make the service better and better so more people will join.” Netflix announced the looming price increase as part of a solid first-quarter earnings report.
Netflix grapples with the rising costs of licensing compelling video. The company has to compete with traditional cable-TV channels such as HBO and Showtime, as well as technology companies such as Amazon.com Inc., Hulu.com, Microsoft Corp. and Yahoo Inc., which are planning to buy more Internet programming. Amazon recently raised the price of its Prime service, which includes an expanding Internet video library, from $79 to $99 annually. Netflix’s stock surged $23.01, or 6.6 percent, to $371.50 in extended trading at the announcement.
The Los Gatos, Calif., company was stung by a backlash in 2011, when it boosted U.S. rates.
Now, the economy is in better shape than three years ago, lessening the pain to people’s pocketbooks, said S&P Capital IQ analyst Tuna Amobi.
Netflix Inc. earned $53 million, or 86 cents per share, during the first three months of the year. That compared to $2.7 million, or 5 cents, last year.