Netflix will be going up in price

Netflix makes quite a bit of money at the end of every month, in the United States alone they pulled in $838 million this month. While they make a ton of money, it's hard for them to balance the cost of supporting third-party content through the service.

The bill for third-party content is around $7.7 billion, 4.6 times Netflix's net revenue. Because of these costs, prices for the video streaming and DVD rental service will be going up over the next few years.

Currently, the basic standard-definition package allows only one-stream at a time and is priced at $7.99, jumping to two concurrent streams and HD as an option brings the price to $8.99, and the package with four concurrent streams with HD and Ultra HD is priced at $11.99. These different packages have allowed for some users to share their passwords with friends – something that Netflix might address in the future.

First, Netflix will tackle the issue of the services cost and provide incentives for users to upgrade from the basic package. Netflix's CEO Reed Hastings has vaguely outlined his intentions, but did not offer how the company would go about it: "we also want to motivate people to move up to the two-stream and the high-def and the ultra-high-def.”

The timeline for the price increase for the service will slowly rise, it will not be something that occurs tomorrow, but Netflix wants to make sure they have the content to support higher prices. “We want to take it very slow,” said  Hastings. “Over the next decade I think we’ll be able to add more content and have more value and then price that appropriately.”

It would be interesting to see a Netflix package that included something like HBO GO, I'd bump up my package for that.

[The Guardian]