Netflix shares rallied to an intraday high during Tuesday’s session after the American streaming giant announced that it would increase the price of its subscription in the United States and the United Kingdom by as high as 17%.
According to the company, this will be part of their efforts in increasing their investment in original content. Netflix intends to spend around $6 billion in original content this year alone. The executives of the company have previously stated that they expect this investment to rise by $7 billion by next year.
The company which is increasingly getting more competition everyday intends to increase its original shows and movies. Companies such as Walt Disney and Amazon have been making announcements regarding their individual plans to launch its streaming services and produce its own original content.
Other companies such as YouTube and Hulu has also been investing more in the production of their original content. Two months ago, Netflix shares suffered and were down by more than 4% after Disney announced that it would be removing all of its content from Netflix. Disney also stated that it would launch its own streaming service by 2019 where the contract between Netflix and Disney ends.
Netflix was able to surpass 100 million subscribers back in July which is an additional 5.2 million subscribers globally with 4 million coming from outside the United States while their profits jumped by 61% to $66 million while their overall revenue rose by 32% to $2.78 billion from the same quarter last year.
The subscription price of Netflix’s basic plan will still be at $7.99 per month in the United States. However, its standard subscription that offers high-definition videos will be higher at $10.99. A premium Netflix subscription that allows a person to use four devices or screens at the same time along with an ultra-HD 4k video will now be at a price of $13.99 from $11.99 per month.
According to Netflix, the company would be increasing the price of their subscription as they add more shows and movies exclusively under the streaming service. Netflix also stated that they would introduce more and new features that will improve a user’s overall Netflix experience.
Netflix, whose shares have been up by 65% since the beginning of the year, is expected to post a positive earnings report along with a continued rise in its subscribers as well as the streaming service being made available to more countries. The shares of the company are currently trading at around $194.
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