Prepare your wallets — Netflix is raising the price on customers.
The streaming service’s subscription notified U.S. subscribers that the Standard subscription price will go up to $12.99 per month at the start of the May billing cycle. This means that subscribers will now pay $2 more dollars than the previous price of $10.99. Premium subscribers will also pay $2 more starting in May, with rates going up from $13.99 to $15.99. Basic subscribers will only have to pay $1 extra, with rates going up from $7.99 to $8.99. As Variety reports, this marks the first time Basic subscribers will see a pay increase.
Netflix itself has stated why they have raised subscription prices, citing their continued investment “in great entertainment and improving the overall Netflix experience.”
The reason for the hike? Debt. According to a Variety article from January about the hikes, Netflix is “looking to boost top-line revenue to offset its ballooning content costs, which were projected to hit $13 billion on a gross basis in 2018.” The company has since raised $8.34 billion in long-term debt Sept. 30 of last year. Variety also reported that the company has “most recently projected negative cash flow of more than $3 billion for 2018). In 2017, the negative free cash flow was $2 billion.
Variety says that analysts believe Netflix will make around $1 billion from the new U.S. subscription rates. Seems like Netflix is set to get even bigger.
Despite Netflix incurring debt, it has been able to secure big names in Hollywood for its service, such as Chiwetel Ejiofor, who released his directorial debut The Boy Who Harnessed the Wind on the platform. Other big names, like DeWanda Wise and Lakeith Stanfield, are also a part of Netflix’s list of film and TV releases this month. Plus, Netflix had a great showing at this year’s Oscars, with Alfonso Cuarón’s Roma winning for Best Director, Best Foreign Film And Best Cinematography. Period. End of Sentence, also on Netflix, won the Oscar for Best Foreign Film and Best Short Documentary and The Ballad of Buster Scruggs was also nominated for Best Original Song, Best Adapted Screenplay and Best Costume Design.