Netflix Inc. said it will offer its first unlimited streaming-only subscription plan in the U.S. for $7.99 (U.S.) a month, and raise prices of its popular unlimited streaming and unlimited DVD plan by a dollar to $9.99 a month.
Netflix shares rose 5 per cent in pre-market trade following the announcement.
The company said on Monday the plan will take effect immediately.
"We are now primarily a streaming video company delivering a wide selection of TV shows and films over the Internet," said Chief Executive Reed Hastings in a statement.
Netflix, which gained success as a DVD rental by mail service, has more than 16 million members in the U.S. and Canada. It debuted its first streaming only service in Canada in September.
Netflix has undergone stellar growth since its 1999 debut. Its shares have gained many-fold since a 2002 IPO.