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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

Updated 2 hours ago - Energy & Environment

Thousands without power as "hazardous" winter storm lashes East Coast

Satellite imagery of the Northeastern U.S. taken by NOAA on Jan. 17. Photo: NOAA

A major winter storm lashed much of the East Coast Sunday and Monday, causing widespread power outages and disrupting travel over the holiday weekend.

The latest: Authorities in North Carolina confirmed that two people died in a car crash and that they responded 600 vehicle accidents during the storm on Sunday, per the Washington Post.

4 hours ago - Health

CDC director says COVID-19 messaging should have been clearer

Rochelle Walensky. Photo: Stefani Reynolds-Pool/Getty Images

Rochelle Walensky, director of the Centers for Disease Control and Prevention, said in an interview with the Wall Street Journal that the messaging around the COVID-19 pandemic and changing guidance should have been clearer.

State of play: Walensky is being coached by media experts and is planning to have more press briefings by herself in order to ensure that CDC is seen as an independent, scientific entity, rather than as a political one, the Journal reports.

5 hours ago - World

UAE asks U.S. to reinstate Houthi terrorist designation after attack

Secretary of State Tony Blinken (left) listens to United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan during a joint news conference at the State Department iin October. Photo: Andrew Harnik/Pool/AFP via Getty Images

Emirati Foreign Minister Abdullah Bin Zayed asked Secretary of State Tony Blinken in a phone call Monday to re-designate the Houthi rebels in Yemen as a terrorist organization, a senior Emirati official told Axios.

Why it matters: Less than a month after he assumed office, President Biden rolled back the Trump administration’s decision to make the designation. He said it hampered humanitarian assistance to the Yemeni people. Since then, the Houthis have escalated their attacks against Saudi Arabia and other countries in the region — including an attack Monday in Abu Dhabi.