Skip to Content
Stock Analyst Update

Netflix Hikes Prices

The price increases are in line with the firm's need to generate additional revenue to help offset the ongoing cash burn.


 Netflix (NFLX) announced price increases for all three of its U.S. streaming plans on Jan. 15. The increases, which range from 13% to 18%, will take effect immediately for new subscribers while existing subscribers will see the new prices over the next three months. While the timing of the announcement two days before releasing earnings is a little strange, the price increases are in line with the firm’s need to generate additional revenue to help offset the ongoing cash burn which is projected to be $3 billion in both 2018 and 2019. We expect that the firm will likely lower its prices in overseas markets like India where its current prices are well above its competitors. We are maintaining our narrow moat rating and fair value estimate of $120.

As a result of the price hikes, the standard Netflix HD and the 4K family plans both increase by $2 to $13 and $16 per month, respectively, and the base plan now costs $9 per month, up from $8 previously. The price hike potentially increases the attractiveness of Disney+ which we expect to debut in the fall at a sub-$10 price point. We also continue to believe WarnerMedia’s planned subscription video on demand, or SVOD, offering at a price above $15 is a strategic blunder as the firm needs to gain traction in what will be a highly competitive marketplace in 2019 and beyond. Conversely, NBCU’s announcement on Jan. 14 that its new SVOD offering will be free to existing pay-TV customers looks to us like a sensible approach to quickly build an audience.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Neil Macker does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.