Netflix reportedly plans to raise its subscription prices for new customers soon, but the fees will remain the same for existing subscribers.
The video streaming service said it intends to spike up rates by $1 or $2, but only new subscribers will be affected by this increase at this point. By raising the fees, Netflix will be able to invest in more movies and TV shows and improve service for its impressive user base of 48 million customers worldwide.
Speaking with Reuters on a webcast, CEO Reed Hastings pointed out that Netflix has improved its selection of TV shows and movies, and also added original series such as the popular "House of Cards" thriller starring Kevin Spacey.
"We will be able to license much more content and deliver it in very high quality video," Hastings told Reuters, referring to the revenue Netflix will draw from these higher prices.
When it comes to the amount of the price increase, the company told investors in a quarterly letter that it intends to implement "a one or two dollar increase, depending on the country, later this quarter for new members only."
Hastings further said that Netflix will raise fees in each of the 41 countries where the video streaming service operates. Existing subscribers, meanwhile, will not see any increase in their rates for one or two years, he added.
As Netflix is a very popular service that's still in high demand worldwide, analysts believe that it can afford to raise prices without bleeding customers as a consequence.
During the quarter that ended in March Netflix pushed the second season of the critically acclaimed "House of Cards," and it will continue to invest in original series such as this one, as well as the popular "Orange is the New Black" TV show to attract even more customers.
The video streaming market is heating up and Netflix faces competition from other heavyweight players such as Amazon and Hulu, as well as various cable operators that offer on-demand content. Adding more content of higher quality will make it even more competitive.
In regards to Comcast's proposed purchase of Time Warner Cable, Netflix said it opposed the deal.
"Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix," the company further said in its letter to investors, according to Reuters. "The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers."
According to Netflix, the fees in question had indeed improved Netflix service for Comcast customers, but at the same time it singled out AT&T's fiber-based U-Verse service as delivering "lower performance" compared to other providers.
In response, Comcast said that Netflix's opposition to the proposed merger was "based on inaccurate claims and arguments," and no company other than Comcast has been more strongly committed to the openness of the Internet.
