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Technology Stocks : Netflix (NFLX) and the Streaming Wars
NFLX 1,158+1.9%3:59 PM EST
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From: Glenn Petersen5/15/2017 8:50:55 PM
   of 2280
 
Netflix May Be Preparing to Raise Prices, but It Is a Necessary Evil

By Brian Sozzi
TheStreet.com
May 15, 2017 | 8:27 AM EDT

A night of Netflix ( NFLX) and chill could become more expensive, if one is to read into what the digital video beast is doing in Australia.

Netflix has been quietly testing out users' reactions to higher subscription fees ahead of the introduction of a so-called "Netflix tax" in the country, which arrives on from July 1, according to Buzzfeed. The story says users laid eyes on a basic ­service increase of $1 to $9.99 a month, the standard service went up $2 to$13.99 a month and the premium service rose from $14.99 to $17.99.

Depending on the reactions, Netflix could very well do something like this in the U.S. The reason for doing so would be simple: it has to.

For one, Wall Street has valued Netflix as having a good deal of pricing power. The Street has seemingly forgotten the harsh reaction to Netflix raising prices back in 2011 and how the streaming giant had to backtrack. To keep Netflix shares hovering at insane levels, CEO Reed Hastings will have to push some form of serious price hikes through -- and not five years from now.

Secondarily, Netflix has to raise prices to support rising sums to develop content and lay the foundation for its streaming service across the world. Keep in mind Netflix continues to burn through an absurd amount of cash. At some point Wall Street will demand cash generation, consistent if possible.

Start saving those pennies, Netflix users.

realmoney.thestreet.com
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