Possibility of backlash

Netflix believes its price rate is justified by recent service improvements, such as a feature that allows people to download shows onto phones or other devices to watch them offline.

RBC Capital Markets analyst Mark Mahaney believes Netflix’s programming line-up is so compelling that the service could charge even higher prices and still retain most of its audience.

He predicted the upcoming price increase will generate an additional $650 million in revenue next year.

But Netflix subscribers have rebelled against price increases in the past, most notably in 2011 when the company stopped bundling its streaming service with its DVD-by-mail service, resulting in price increases of as much as 60 percent for customers who wanted both plans.

Netflix lost 600,000 subscribers and its stock price plummeted by 80 percent in the subsequent backlash.

The company rebounded strongly, though, propelling its stock from a split-adjusted low of $7.54 in 2012 to $194.39 after investors reacted positively to the higher prices, driving up the shares by 5 percent.

And Netflix blamed a temporary slowdown in subscriber growth last year on the lifting of its price freeze on long-time customers who decided to drop the service rather than pay slightly more money.

Wedbush Securities analyst Michael Pachter believes less than 10 percent of current subscribers will cancel Netflix as prices rise again, but he predicts it will be tougher to attract new customers who will choose Amazon’s cheaper alternative.