It's getting a bit more expensive to enjoy Netflix (NASDAQ: NFLX) if you're Canadian. The world's leading premium video streaming service is pushing its rates higher in Canada, according to CBC News. The monthly plans for new Canadian subscribers will go up $1 or $2 depending on the tier. The standard plan that includes high-def streaming on up to two screens at the same time will go from $9.99 to $10.99. The cheaper plan that offers only standard definition on a single screen will go from $7.99 to $8.99. The four-screen plan with access to ultra high-def 4K content is going up $2 to $13.99.
The move is limited to Canada, but it's only natural to wonder if a stateside hike is coming soon. Netflix was testing a rate increase in Australia in May in response to a local tax increase there, only to make it official a few weeks later. If customers don't flinch -- and Netflix has increased its U.S. rates twice since early 2014 without sacrificing much in terms of subscriber growth -- there's little reason to doubt the possibility. It's really a matter of when and not if Netflix will raise rates. I hate to give away the ending, but it'll probably end with you paying up to keep Netflix going.
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The new normal
The higher Canadian rates will only apply to new subscribers, but this doesn't mean that existing accounts are off the hook. Netflix will be notifying them of the increase by email in the coming weeks. This is a far cry from its initial global increase in the May 2014, when the company promised existing subscribers that they would be able keep paying $7.99 a month for the traditional high-def, two-screen plan for at least two years. The rate went up to $8.99 for new subscribers at the time, only to go to $9.99 a month 17 months later.
Subscribers keep coming. Netflix had 48 million subscribers worldwide when it announced the initial price increase three years ago, and the platform's user base has more than doubled to 104 million accounts.
There's no denying that the competition has gotten smarter in that time. Hulu, Prime Video, HBO Now, Sling TV, and countless other internet-tethered offerings have widening catalogs at compelling price points. It's not just Netflix putting out proprietary content, too.
However, Netflix's moat is its reach. You can do a lot when you have a nine-figure paying audience that can bankroll even more content. Netflix is profitable and should stay that way, even as it eyes $15.7 billion in streaming content obligations.
Every increase in the past has resulted in far more new subscribers coming in than grumbling users on the way out, but there may come a time when Netflix stretches its elasticity too far. The breaking point didn't happen at $8.99 a month in 2014 or $9.99 in 2015, but the dot-com darling may not want to get too greedy when there are still so many homes left to conquer.
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