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Photo: Chesnot/Getty Images

Netflix is raising the prices for all three of its subscription tiers beginning Tuesday, Jan. 15. Shares for Netflix were up over 5% after the news broke Tuesday.

Why it matters: The business model behind Netflix's strategy is to accumulate as many users worldwide with as much original and licensed content as possible, and then to hike the monthly subscription prices on those users once they are hooked.

“We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience for the benefit of our members."
— A Netflix spokesperson tells Axios

Details: These increases will apply to the U.S., as well as countries in Latin America and the Caribbean where Netflix bills in U.S. dollars (e.g., Uruguay, Barbados, Belize). It will exclude major markets like Mexico and Brazil.

  • The changes will be applied to all existing members over the next few months and to all new members immediately.

By the numbers:

  • The basic plan will increase from $7.99 to $8.99 per month.
  • The HD quality plan (the most popular) will increase from $10.99 to $12.99 per month.
  • The Ultra HD plan will increase from $13.99 to $15.99 per month.

Background: Netflix last raised the price of its premium subscription from $11.99 to $13.99 monthly in October 2017, which is nearly double what it was just four years ago at $7.99 per month. This is its first time raising the price for its basic plan.

  • The company has since added a lot more original programming and features to its offering, including a new TV interface and better download functionality.

Be smart: Experts say the price hikes are in response to growing competition for Netflix at home and abroad. (Case in point: NBC said just yesterday it would join a long list of networks launching a streaming service to take on Netflix in 2020.)

"[W]ith an estimated 60 million domestic subs, Netflix has over half of U.S. households. That means that future growth is most likely coming from below median income households, who are MUCH more price sensitive. They SHOULD care about competition."
— Tweet from Michael Pachter, a research analyst at Wedbush Securities

Between the lines: The streamer has had to invest significantly more money in original programming, in part because networks are beginning to yank their own content from Netflix.

  • In the U.S., networks like Turner, Disney and NBCUniversal have been increasingly pulling their programming licensing from Netflix to save it for their own streaming services that they are building to compete with Netflix.
  • French broadcasters have begun doing the same thing in order to provide their own streaming service, Salto, with exclusive content access, per VentureBeat.

The big picture: It's not just Netflix. As Axios reported last summer, most of the digital content bundles that Americans are using in the place of costly cable packages are significantly hiking their prices as they grow and hook consumers.

Go deeper: Inflation nation: The rising cost of digital TV

Go deeper

House passes $1.9 trillion COVID relief package

Photo: Screenshot via C-SPAN

The House approved President Biden's $1.9 trillion COVID relief package on a 219-212 vote early Saturday morning, sending it to the Senate for a possible rewrite before it gets to Biden's desk.

The big picture: The vote was a critical first step for the package, which includes $1,400 cash payments for many Americans, a national vaccination program, ramped-up COVID testing and contact tracing, state and local funding and money to help schools reopen.

8 hours ago - Health

Biden says it's "not the time to relax" after touring vaccination site

President Biden speaking after visiting a FEMA Covid-19 vaccination facility in Houston on Feb. 26. Photo: Mandel Ngan/AFP via Getty Images

President Biden said Friday that "it's not the time to relax" coronavirus mitigation efforts and warned that the number of cases and hospitalizations could rise again as new variants of the virus emerge.

Why it matters: Biden, who made the remarks after touring a vaccination site in Houston, echoed CDC director Rochelle Walensky, who said earlier on Friday that while the U.S. has seen a recent drop in cases and hospitalizations, "these declines follow the highest peak we have experienced in the pandemic."

Updated 8 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: Most COVID-19 survivors can weather risk of reinfection, study says — "Twindemic" averted as flu reports plummet amid coronavirus crisis
  2. Vaccine: FDA advisory panel endorses J&J COVID vaccine for emergency use — About 20% of U.S. adults have received first vaccine dose, White House says — New data reignites the debate over coronavirus vaccine strategy.
  3. Economy: What's really going on with the labor market.
  4. Local: All adult Minnesotans will likely be eligible for COVID-19 vaccine by summer — Another wealthy Florida community receives special access to COVID-19 vaccine.
  5. Sports: Poll weighs impact of athlete vaccination.