5 Reasons You Won't Cancel Netflix After Last Week's Hike

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Netflix Price Increase
Elise Amendola/AP
Netflix (NFLX) moving to increase its monthly rate for new subscribers last week came as a bit of a surprise. Didn't CEO Reed Hastings say just this summer that he wants his company "to take it slow" with any potential increases?

Obviously, Netflix thinks that the time is right to give the monthly rate for its standard streaming plan a boost. This is the second time in two years that Netflix has jacked up its fees, but -- deep down inside -- you know that you're not going anywhere.

You will continue to be a Netflix subscriber. Let's go over a few reasons that last week's move may not be enough to scare you away.

1. The New Rate May Not Apply to You Just Yet

Keep in mind that Thursday's push to charge $9.99 a month is just for new subscribers. Existing customers won't be hit with the new price until next October, and that's probably a pretty good incentive to stick around.

If you were planning on canceling the service after you got up to speed with "Orange Is the New Black," you may want to rethink losing your place at $7.99 or $8.99 a month. Netflix seems to have a steady flow of original programming and existing content. You may as well stick around.

2. Netflix Is Honest About Investing in Its Catalog

Netflix is justifying the increase by saying that it's investing in content. That's not lip service: We've seen its streaming content obligations balloon from $7.7 billion to $10.1 billion over the past year. Armed with more money being paid by a wider user base, it's a safe bet that the tab will continue to move higher.

3. Customers Didn't Bail Last Time

Browse the comments section of stories detailing last week's move and you'll find a few people threatening to cancel. That may seem ominous, but there was a similar level of mumbling last year, too.

Folks stuck around then. Netflix has 15.5 million more subscribers now than it had a year earlier. It's a safe bet that the count will continue to rise beyond the 65 million streaming accounts that it was watching over at the end of June.

4. Movies Could Be a Game Changer

Folks pay more for a single premium movie channel than they do for Netflix. The appeal is mostly that HBO has "Game of Thrones" and Showtime has "Homeland," but those channels also have a steady flow of recent releases.

Netflix is about to shake up that market. Friday's debut of "Beasts of No Nation" is the first original film that the video service is bankrolling, but it won't be the last. We have several original Adam Sandler flicks, and even the long-anticipated sequel to "Crouching Tiger, Hidden Dragon" that will debut exclusively on Netflix next year. This is a new page in the Netflix playbook, and since it's incremental, it will make it that much harder to quit the platform.

5. Even at $9.99 It Is Still a Good Value

It's hard to complain about Netflix at $9.99. Rival Hulu just rolled out a higher-priced ad-free version of Hulu Plus at $11.99, and even that's a reasonable ransom for a growing catalog of digital content.

Cable bills run several times what Netflix is now charging, which basically is about the price of a single movie ticket. It's true that Netflix going from $7.99 to $8.99 last year and $9.99 now represents a 25 percent overall increase, but if your $100 cable bill went up by two bucks, would folks be bothered by the 2 percent increase? As far as monthly costs go, it's the same thing.

We may very well get to the point where Netflix is charging too much, but that isn't happening now.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. Try any of our Foolish newsletter services free for 30 days. Check out The Motley Fool's one great stock to buy for 2015 and beyond.
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