Netflix home screen. Consumers are seeing a Netflix price hike

Here's some bad news for those looking forward to the season 3 premiere of “Stranger Things”: The demogorgon isn't the only thing on the rise.

Netflix is planning to boost prices for all of its monthly streaming video plans, and analysts say consumers should expect future price hikes from both Netflix and most other streaming services.

The price increase is Netflix's first since 2017 and its biggest ever. 

“We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience,” a Netflix spokesperson told Consumer Reports in an email.

New Netflix Pricing
The company's most popular plan, which lets a family stream two shows at once, will climb from $11 to $13 a month. The premium plan, which offers 4K videos with HDR plus support for up to four simultaneous users, is going up from $14 to $16 each month. The basic plan, which escaped a price increase during the last round of hikes, will rise from $8 to $9. 

New subscribers will feel the increases immediately. The higher rates will be rolled out to existing subscribers over the next three months.

Netflix is just the latest streaming service to raise prices.

Last spring, Amazon upped the cost of its annual Prime service, which includes video streaming, by $20. Also in 2018, several cable-style streaming services, such as DirecTV Now, Sling TV, and YouTube TV, raised priced by around $5 per month.

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The Impact of Price Hikes
For many households, adding a monthly streaming service or two to a cable-TV package has been an affordable luxury. Higher prices could make those streaming add-ons less appealing.

Rate increases from Netflix and its competitors could also make budget calculations more complicated for cord cutters looking to save money by replacing their cable TV service with streaming services.

Cord-cutters have lots of options, but let's say you want to use Netflix along with a midtier package of channels from the DirecTV streaming service and then add that company's $5 HBO option. The total would top $70 at today's prices—cheaper than many cable-TV bills, but not by much.

You can find cheaper streaming options, and cable prices vary so widely that comparisons are difficult. But as prices for individual services rise, more consumers could find it hard to customize a package that beats the best offers from cable or satellite providers while still providing a good selection of content. 

Streaming Will Only Get More Expensive

Prices are rising because streaming companies face high costs to acquire content, according to Dan Rayburn, principal analyst at the research firm Frost & Sullivan.

"Every streaming service is facing increased content acquisition and/or development costs," Rayburn says. In a blog post, he detailed recent content costs for an unnamed cable-replacement service, the kind that offers conventional broadcast and cable channels as opposed to individual shows and movies like Netflix. 

The breakdown shows that ESPN was the most expensive channel, at $6 per subscriber per month. By comparison, HGTV was $1.98 per subscriber per month, and NBC was $1.46. (The prices vary by streaming service, length of contract, and number of subscribers, so consider those numbers ballpark figures.)

Netflix has an added incentive to raise prices, according to Bruce Leichtman, president and principal analyst at Leichtman Research Group: It's the easiest way to boost revenue.

"At this point in the company’s evolution, a price increase across the existing subscriber base is a more lucrative business strategy than just trying to grow the base," he says.

Leichtman doesn't expect annual price increases from Netflix, but says the company could make changes as new services are launched by Disney, WarnerMedia, NBCUniversal, and others.

However, he says, consumers should expect more regular price hikes from services that compete directly with cable, such as DirecTV Now and Sling TV.

"Each started with very attractive entry points, not unlike traditional pay-TV services," Rayburn says. "But with low margins and increasing content costs, which are different from Netflix’s spending on content, it's likely that these services will have regular price increases." 

The result, according to Rayburn, is that consumers shouldn't be surprised to find some day soon that a streaming service with a decent channel lineup costs about the same as a regular pay-TV package.