Here’s One Reason Your Netflix Fee Is Increasing

Image via Flickr/ Kristin

Netflix announced on Monday that it is increasing the cost of its service to some consumers. The move, which will begin with a fairly small $1-$2 increase for new customers, is not going to offend many of the company’s current users right away, but it will cause an upward creep in the general price of Netflix over the next two or three years. There’s a very good reason that the cost of the service is going up, and it’s got nothing to do with Comcast.

Netflix is, at its heart, competing with HBO. There are pros and cons to each service, but the main difference is content. HBO offers access to the content that everyone is talking about. Game of Thrones is the centerpiece of that idea. It’s a must watch show, and it’s only on HBO. Netflix needs more content, and more content means more money.

Netflix Needs Your Money To Give Better Service

Content costs a whole lot of money, and prices are constantly changing. That’s why Netflix is always editing its line up of movies. Contracts with content owners last for a fixed period. If the content is not worth a price Netflix can agree on, they won’t pick it up. Content that makes people sign up to Netflix is expensive, however.

Disney is the biggest content provider betting on Netflix success. A deal that will see several original Marvel television series exclusive to the service was signed in November of last year and another that guarantees a Netflix showing of several Disney releases just months after theater runs was signed this year. Disney content, which includes most of the Marvel stable, all of George Lucas’ creations and all of the Pixar movies, make up a large part of what people as a whole want to watch. Better service, which includes the ability to watch the Avengers 2 at home just months after a theater showing, usually costs more money. With one price rise on the way, it’s unlikely that this is the last time Netflix will come looking for a higher contribution from customers.

Netflix May Get Even More Expensive

Right now Netflix is going to continue costing $8 per month for those already on the service. In the coming weeks the company is likely to announce a price hike for those joining for the first time. After a “generous time period” current subscribers will be told that the service is going to cost more, and they’ll have to pay it.

Netflix will, undoubtedly, raise prices several times over the coming five years, and it is likely that the company will begin to offer a premium service. If you want unlimited access to of-brand movies and cancelled sitcoms you can buy the basic package. Netflix Premium will  be bursting with original content, but it will cost substantially more.

Netflix is coming for your wallet, but the service is already so cheap compared to cable most customers won’t mind another dollar or two. Here’s hoping the content is worth the price of admission.