Netflix announces immediate fee increase for new UK subscribers

Netflix is increasing its monthly fee for streaming movies and television shows from £5.99 to £6.99, hoping that the "House of Cards effect" will keep subscribers from deserting to the rival Amazon/Lovefilm service.

The price increase will take effect immediately for new subscribers but will be delayed for two years for existing members.

The decision to raise prices comes amid the commercial and critical success of House of Cards, where Netflix invested €100m in the drama starring Kevin Spacey and made the entire series available for immediate streaming. It has also enjoyed a ratings hit with Orange is the New Black and plans further original content from documentaries to children's programmes. But it makes Netflix £1 a month pricier than Amazon Instant Video (the new name for Lovefilm) which charges £5.99 a month.

Netflix will allow subscribers to continue paying £5.99 a month if they opt for a lower-resolution "SD" quality service. It also has a multiple-users service for £8.99 a month which allows four users to view programmes at the same time on a single monthly account.

In an email to subscribers this morning, Netflix said: "In order to continue adding more films and TV programmes, we are increasing our price from £5.99 to £6.99 for new members. As a thank you for being a member of Netflix already, we guarantee that your plan and price will not change for two years."

Netflix is raising prices not just in the UK but almost across the board for its 48 million global subscribers.

In April it said that US subscribers would see a potential "one or two dollars increase" in monthly rates for new members, while in Europe prices are also rising, from €7.99 to €8.99 a month or €11.99 for the multiscreen service.

Netflix, based in Los Gatos in California's Silicon Valley, last tried to introduce a price hike in 2011 in an attempt to separate its DVD-renting customers from digital only subscribers. But the plan proved a disaster as customers quit the service in droves.

With the huge audiences achieved through House of Cards – and a pilot price increase in Ireland which showed "limited impact" in subscriber losses – it is gambling on more subscribers retaining their membership this time.

Profits at the streaming service jumped to $53m (£32m) in the first quarter of 2014, while subscriber numbers rose 2.25 million.

Netflix has set itself the target of overhauling cable channel HBO in the US, which has 130 million subscribers.