Are Netflix's and's Price Hikes a Win for Investors?

Breaking down why and Netflix increased the cost of their respective streaming services and where all that cold hard cash is expected to go.

May 19, 2014 at 8:00PM

There are plenty of parallels between streaming first-mover Netflix (NASDAQ:NFLX) and's (NASDAQ:AMZN) Prime Streaming Video service.

Netflix has been around longer, but it hasn't taken long to establish its Prime Streaming service as one of the most powerful players in streaming media. Netflix and have also notched the most noteworthy wins in developing their own original content. 

Netflix Logo

Source: Netflix.

And recently, thanks to a series of moves from these companies, they share another trend: price hikes.

Is the price right?
Last week, Netflix announced that, effective immediately, it would increase the cost of its standard streaming membership for new members from $7.99 a month to $8.99, while also unveiling a cheaper option without HD streaming or the ability to use Netflix on multiple devices. This follows's March move to increase the cost of its Prime subscriptions to $99 per year from the original $79.

The culprit that's driving this pricey trend? Rising costs.

According to Netflix and, their respective price increases will be used entirely to deal with rising costs affecting their operations, instead of increasing profits for investors as some had hoped.

In the video below, tech and telecom analyst Andrew Tonner further examines the price hike news and what it means for investors.

3 great ways to play the "Death of Cable"
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 


Editor’s note: To clarify, the two-year period mentioned in the video refers to the delay of the price hike for current subscribers rather than a promise not to raise prices for new subscribers for two years.

Andrew Tonner has no position in any stocks mentioned. The Motley Fool recommends and owns shares of and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information