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Netflix, Disney, and AMC Are Raising Prices Because They Can

By Rick Munarriz - Updated Apr 18, 2019 at 10:55PM

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It's costing you more to stream Netflix, head out to Disneyland, or be a part of AMC's multiplex subscription service. But until you stop paying, they'll keep pushing prices higher.

It's going to cost you a bit more to Netflix ( NFLX -3.76% ) and chill. The leading streaming service is jacking up the monthly rates of all of its streaming plans for U.S. subscribers. It's the first increase for stateside accounts since late 2017, and it's not an insubstantial hike: Prices across all three of its streaming plans are now 13% to 18% higher for new users as of Wednesday morning. Existing members will begin paying the new rates as their plans come up for renewal through the next few months.

Netflix isn't the only one making it more expensive to get past the tollbooth operator. Disney ( DIS -1.90% ) boosted Disneyland ticket and pass prices by 7% to 10% last week, and Disney World is expected to follow suit in the coming weeks. AMC ( AMC -15.82% ) has only offered its AMC Stubs A-List multiplex subscription plan since last summer, but earlier this month it raised monthly rates by 10% to 20% across some of the country's most populous states.

The characters of Sense8 raise a toast at a bar.

Higher prices? Netflix shareholders will drink to that. Image source: Netflix.

That's entertainment

The economy may be giving off some mixed signals when it comes to its sustainable health, but Netflix, Disney, and AMC aren't afraid to push through higher prices. There's a perk to being the top dog, and when you're the world's leading premium streaming service, theme park operator, or multiplex ticket taker, you'll stretch your pricing elasticity until your customers buckle.

Disney has been raising its domestic theme-park prices every year since 1989, and it's working on record attendance levels through most of its gated parks. AMC just started offering its plan that allows film buffs to check out as many as three premium screenings for one monthly price, but after signing up more than 500,000 members in just a few months, can you really blame it for adjusting its prices in markets where movie tickets cost more?

As for Netflix, this is the fourth time that it has increased its U.S. rates in five years. We're talking about a whopping 63% increase to its most popular plan, which offers high-def streams on two devices at once. The dot-com darling's global audience has nearly tripled over that period -- you be the judge about whether it's going too far this time.

Entertainment matters, and it's not a surprise Netflix, AMC, and even Disney have held up better than the general economy when the going has gotten tough. Paying a few bucks more for the art of escaping during rough patches (or celebrating good times) will keep customers close at Netflix, Disney, and AMC. The price increases seem large on a percentage basis, but they're just a couple of bucks each. Netflix is still cheaper than HBO Now and most streaming live TV services. AMC Stubs A-List still pays for itself by the second or third monthly screening. Disney admission costs are just a small part of the overall vacation budget.

Great companies with good audiences can get away with pushing through higher prices -- and that, in turn, typically makes them great investments.

Check out the latest Disney, Netflix, and AMC earnings call transcripts.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
NFLX
$617.77 (-3.76%) $-24.13
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$142.15 (-1.90%) $-2.75
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$28.57 (-15.82%) $-5.37

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