Netflix at $8.99 is Still a Bargain

TV-Q and A-Taylor Schilling
Paul Schiraldi/Netflix/APThe second season of "Orange Is the New Black" debuts on Netflix on June 6.
Binge viewing is about to get a little more expensive. True to its word, Netflix (NFLX) announced on Friday that the rate for its streaming plan will go up a buck to $8.99.

Netflix is freezing rates for current members at $7.99 a month for the next two years. Netflix closed out its latest quarter with more than 35 million domestic subscribers and more than 48 million members worldwide. That's a lot of people with an incentive to stick around, but it's not as if $8.99 a month will scare potential viewers away. Netflix is still one of the best deals in premium video entertainment, and it knows it.

17.5 Channels of Quality Entertainment

Letting Netflix go is easy. It's a simple service to cancel. The rub comes in finding cheaper ways to entertain oneself.

Forget cable and satellite television. Those tabs can run into the triple digits, and that's with most channels going unwatched. Ratings tracker Nielsen put out a shocking metric last week, reporting that families in this country average only watch 17.5 of the 189 TV channels in their subscription plans. Yes, we're watching just 9 percent of the channels that we pay for.

There are other forms of premium entertainment, of course. Time Warner's (TWX) HBO is the largest premium movie channel. It's home to "Game of Thrones," "Girls," "Veep" and a rotating slate of fresh home video releases. Subscribers have access to HBO Go, tapping the channel's vault of classic HBO shows and content for your streaming pleasure.

%VIRTUAL-article-sponsoredlinks%But HBO costs nearly twice as much as Netflix. Oh, and you also need to have an existing cable or satellite television plan. HBO Go is a standalone offering in select foreign markets. (AMZN) has a growing catalog of streaming content that it makes available at no extra cost to members of its Amazon Prime loyalty shopping club. It can no longer be considered Netflix Lite, either, especially after landing licensing deals to content that's not available on Netflix. From "Downton Abbey" to Viacom's (VIA) Nickelodeon and Comedy Central content, Amazon's a reasonable option. Later this month several older HBO shows will be available on Amazon Prime Instant.

However, Amazon Prime went for an even bigger price hike this year, boosting its annual rate from $79.99 to $99 for the year. That does include free two-day shipping through on merchandise and other digital perks, but Netflix's catalog remains substantially larger for what are now comparable prices.

The Joys of an Expanding Digital Ecosystem

Netflix spends a lot of money on content. It had $7.1 billion tied up in streaming content obligations as of the end of March, up from last year's $5.7 billion in tally. Netflix has more customers so it can invest in more content. That's the beauty of this expanding and scalable model. Netflix has committed 25 percent more in future content over the past year, and it can do that because it's dividing the costs between the 33 percent more subscribers it has now than it did a year earlier.

The math works in Netflix's favor, but the math is even strong for consumers. They're getting more content. The pool of content grows, and since we're talking about digital assets, every single subscriber has access to more and more shows and movies whenever they want to watch.

Naturally this perk of escalating content will go the other way if subscriber growth stalls or begins to decline. This could be why Netflix went with a modest 12.5 percent increase in price instead of the 25 percent uptick to $9.99 a month that it had also considered.

However, as long as Netflix keeps growing -- and we're at 48.35 million streaming accounts and counting -- it should be more than worth the updated price for new subscribers.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and Netflix. The Motley Fool owns shares of and Netflix.

12 Ways to Save Money by Going Green
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Netflix at $8.99 is Still a Bargain
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By leaving your car at home two days a week, you can reduce your greenhouse gas emissions by more than 3,000 pounds a year, according to the U.S. Environmental Protection Agency. Plus, you'll save money on gas and parking if you bike rather than drive to work. For example, you'll save about $7 a day by biking rather than driving if you have a 15-mile round-trip commute. The How Much Can I Save Biking to Work? Tool analyzes your financial benefits. If biking isn't an option, you still can drive less by organizing a carpool, using public transportation or walking.
You can save an estimated 10 percent a year on heating and cooling costs by installing a programmable thermostat, according to the Energy Department. Save energy in the winter by setting the thermostat (which costs as little as $20) to 68 degrees while you're awake and programming it for a lower temperature while you're asleep or away from home. Set it for 78 degrees in the summer and increase the temperature when you're not home. You can shave 1 percent off your bill for each degree you decrease the temperature in the winter or increase it in the summer. And, no, you won't have to use more energy to warm or cool your house off when you get home. That's a common misconception, according to the Energy Department.
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You can save money on your water bill by installing water-efficient faucets, showerheads and toilets. Look for products with the WaterSense label, which means they are certified to be at least 20 percent more efficient without sacrificing performance. For example, WaterSense-labeled toilets can save a family of four more than $90 annually on their water bill and $2,000 over the toilet's lifetime, according to the EPA. Considering you can get a toilet with the WaterSense label for as little as $98, it will pay for itself in about a year. Estimate your savings with this simple calculator.
Americans discard more than 2 million tons of obsolete electronic products annually, according to the EPA. Rather than fill the dump with your unwanted gadgets, fill your wallet by selling them. Sites such as BuyMyTronics.comGazelleNextWorth and uSell pay cash -- and cover the cost of shipping -- for electronics such as smartphones, tablets, computers and more. The type of electronics you can sell varies by site, as does the amount you can receive. If none of the sites will accept your unwanted electronics, see the EPA's eCycling list for responsible electronics recyclers.
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You may be able to cut your water costs a little by installing rain barrels at downspouts to collect water. You can attach a hose to the barrels to water your lawn and garden. The cost can be free (from some water departments), cheap (a recycled large plastic trash can or metal drum) or expensive (about $100 for a 50-gallon barrel at home and garden centers and online.
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Energy vampires –- electronics that draw power even when they're not in use –- cost Americans almost $10 billion a year and account for almost 11 percent of all U.S. energy use, according to the EPA. If you want to avoid unplugging all of your electronics when they're not in use, you can buy an inexpensive power strip that several things can be plugged into and turned off with the flip of a switch. The Smart Strip Power Strip ($25 and up) will automatically shut off computer peripherals, such as printers and scanners, when not in use. And the Belkin Conserve Smart AV ($29.99) automatically shuts off components, such as a gaming console, receiver and speakers, when you turn off your TV.
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