Netflix price hike probably not the last for cord cutters USA Today , WTSP

Netflix price hike probably not the last for cord cutters

Consumers have become attached to Netflix and other subscription video services such as Hulu and Amazon Prime Video and the immediacy of binge viewing the services offer. And even though low monthly prices have helped drive adoption, price increases — at least one the size Netflix announced Thursday, $1 or $2 more per month — won't necessarily lead to defections.

"Netflix has a lot of headroom for price increases," said Michael Greeson, president and principal analyst for The Diffusion Group, a research firm in Plano, Texas. "The service offers tremendous value even at the higher, but still very low, monthly costs."

In fact, demand is so strong that analysts expect consumers, whether they've cancelled cable or just added these streaming services to their monthly entertainment bill, to swallow further price hikes — which could come from Netflix or its major competitors, Hulu and Amazon.

Amazon, for starters, hasn't risen the price of its Prime service — $99 annually for free shipping, along with Prime Video, Prime Music, unlimited photo storage and other perks — in more than three years. It only began offering Prime Video ($8.99 per month) separately last year. So it could be due for an increase sometime soon.

Hulu, which is owned by four major entertainment companies, began as a free viewing site with advertisements. It launched a subscription service seven years ago and now costs  $7.99 monthly with limited commercials and $11.99 monthly for commercial-free viewing.

Netflix's move, Greeson said, "gives permission to other (streaming) providers to consider price increases. Of course, their economics and user base will vary, but I think Amazon Prime and Hulu subscribers could tolerate a small price increase just about as well as Netflix."

U.S. consumers are expected to increase their spending on streaming services by 17% this year to $9.6 billion, and another 13% to $10.9 billion next year, according to consulting firm PricewaterhouseCoopers.

Helping drive all this: the growing number of homes with broadband Internet service, expected to hit nearly 100 million this year, up from 97.6 million last year, according to The Diffusion Group. The number of broadband homes has surpassed those with pay TV service, the research firm estimates.

Netflix — in nearly half of U.S. broadband homes, according to Park Associates — has angered customers with past price hikes. Six years ago, Netflix lost 800,000 U.S. subscribers when it raised the prices for its plan offering streaming video and DVD rentals from $9.99 to $15.98.

Two years ago, Netflix raised by $2 the price for its most popular standard plan for new members -- current subscribers got the increase over several months last year -- a move that led to a growth slowdown, as some subscribers left.

This one should go much more smoothly, says Scott Devitt, a technology analyst at Stifel Financial Corp., in a note to investors Thursday. Netflix is "still the best value on the consumer Internet," he said.

Netflix is charging new customers $10.99 monthly, one dollar higher than the previous rate, for the most popular plan: high-def video watchable on two simultaneous screens. The $11.99 premium plan, which lets you run Netflix on four screens and get 4K video, goes up $2 to $13.99. It keeps its most economic plan the same, at $7.99