Netflix Says Price Hike Will Cover The Cost Of Offering Better Services

The online rental service says delivery charges and increasing expenses to acquire movie-streaming licenses are the reasons for its price hike.

In an attempt to cover the cost of its expensive DVD-rental business and push more customers to use its online movie-streaming services, Netflix is increasing the price of its bundled service, which includes both options, to $16 per month. Prior to this, Netflix was charging $10 per month for the same package. But according to Jessie Becker, vice president of marketing, that plan didn’t make sense financially or satisfy the customers who just want the DVD-rental service.

Netflix’s analysts hope that the price hike will make the company’s business more viable in the face of increasing expenses needed to cover postage fees for DVD-rentals via mail and the acquiring of streaming licenses for movies.

According to Netflix, its DVD-rental service via mail is at least 7 times more expensive to run.