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Netflix to increase prices for new members as Q1 results show profit rise

Netflix said Monday it’s planning to increase its subscription fee for new users by between one and two dollars a month (depending on country), with the extra revenue targeted at buying more content for its streaming video service. The rise is expected to take effect in the next couple of months, though existing customers will continue to pay $7.99 monthly.

The news came as the company announced Q1 financial results that saw an increase in both profit and subscribers.

Profit for the quarter came in at $53 million, an increase of $3 million on a year ago, while total revenue hit $1.27 billion, up from $1.05 billion 12 months earlier.

Netflix said in its earnings report for the quarter ending March 31 it’d picked up 2.25 million new users in the US, bringing the total figure to 35.7 million. Internationally, its user base rose by 1.8 million, taking it to 12.7 million.

The subscription fee hike announced by Netflix comes three years after a similar rise in fees turned into a damaging episode for the company. Its decision to split its streaming and DVD-by-mail services – resulting in a significant price increase – caused many angry users to cancel their subscriptions, sending the company’s stock plummeting.

In an effort to end the exodus, Netflix CEO Reed Hastings apologized to users, admitting he’d “messed up” with the way the company had communicated its decision to alter its services and pricing. Understandably fearful of a similar backlash, the company has been much more careful in planning this latest price hike, with a trial run in Ireland apparently having had little impact on users’ enjoyment of the service.

Rival firm Amazon also bumped up its prices recently, increasing the cost of its Prime membership from $79 a year to $99, equal to $8.25 a month. Besides streamed content, Prime members are also able to enjoy benefits such as free two-day shipping for items bought on its site and access to the company’s Kindle lending library.

As for Netflix’s price hike, if you’re interested in the service and are yet to sign up, now’s the time, with the increase still a few months away.