Netflix could raise prices to finance future mergers and acquisitions

on Tuesday, July 12, 2011

Netflix could raise prices to finance future mergers and acquisitions  Media giant Netflix has attracted an inordinate number of users over the past decade by offering its DVDs and online streaming service at prices that are far lower than many traditional companies like Comcast and Time Warner. According to a published report, Netflix is close to raising rates for some of its users.

Bloomberg reports that Netflix could raise its rates as soon as the end of the day Tuesday. The rate hikes could affect more than 50 percent of its userbase, according to the news provider. Its current combined DVD-by-mail and streaming service costs $9.99 per month, but Engadget.com reported that the company could raise that figure to $15.98 per month.

The added costs would help finance the company's aggressive expansion into foreign markets. Currently, Netflix is working to expand into South America, with Western European and Asian markets still within its sights. Janney Montgomery Scott analysts Tony Wible told the news provider that to accomplish that, it will have to acquire more companies and ink deals with distributors to augment its streaming catalog.

"We are seeing reports that a price hike could be coming as soon as tonight for their hybrid plans, which we estimate account for 80 percent of their subscribers," he said.

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