Netflix Prices Going Up: Service to Cost $1 to $2 More Starting Before July

Netflix prices are going up. Subscribers can expect to see a $1 to $2 increase in their subscription over the next year.

For the first time in three years, Netflix is going to raise its prices to help pay for more Internet video programming. The increase is supposed to take place sometime before July and prices will go up $1 to $2 per month for new customers. The nearly 36 million current subscribers will get a slight break before the hike takes place as current users will continue to pay $7.99 for at least the next year according to Netflix CEO Reed Hastings, the Associated Press reports.

"When we look at the shows and movies that we will be able to get if we have a bigger budget, it's exciting," Hastings told The Associated Press. "We want to make the service better and better so more people will join."

This announcement of a price increase comes as Netflix has a strong first-quarter earnings report. However the company has been feeling financial pressure as it has to deal with the rising costs of licensing to obtain the shows and movies in its service. Netflix also has stiff competition with cable-TV channels like HBO and Showtime and other video services like Amazon Video and Hulu, which are planning on adding more programs from Hollywood studios to their services.

Netflix announced the looming price increase as part of a solid first-quarter earnings report.

"I think they need to raise the price to remain profitable," Wedbush Securities analyst Michael Pachter told AP.

Netflix would be following Amazon's Prime's price increase. The service, which includes a recently expanded video library, recently jumped from $79 each year to $99.

Amazon recently raised the price of its Prime service, which includes an expanding Internet video library, from $79 to $99 annually.

Not everyone is expected to be happy with the price increase, even if it means more content. The company received heavy customer backlash in 2011 when it raised rates by 60 percent for its DVD-by-mail services. Netflix lost 800,000 subscribers after the announcement of the price change. The DVD service is dying out.

This time around, current subscribers will get an extended grace period before the price changes take place.