Netflix Increases Subscription Prices Despite Success in Combating Password Sharing
Netflix has announced price hikes for several subscription plans in the US, UK, and France, underscoring the company’s growing confidence as it continues to attract subscribers despite rising competition and content challenges. The changes vary by region and plan. The US will see an increase of $3 per month for the premium ad-free plan, now costing $22.99 monthly. In the UK, the premium plan will rise by £2 to £17.99 ($21.84), while in France, it will increase by 2 euros to €19.99 ($21.06).
These price hikes come on the heels of a significant boost in subscribers, with Netflix adding 8.8 million new subscribers in the third quarter of 2023, marking the most substantial increase in more than two years and driving its shares higher. The company’s ability to keep drawing new members amid competition, higher prices, and a Hollywood strike that has delayed new releases has been questioned. In the first half of the previous year, Netflix lost about one million subscribers, raising concerns.
Part of the recent subscriber growth resulted from Netflix’s decision to charge an extra fee for having multiple households on the same account. Additionally, the launch of a cheaper plan with ads led to about 30% of new sign-ups in the available countries.
The streaming giant reported strong financial results, with quarterly revenue increasing by 7.8% year-on-year to $8.5 billion, while profits reached $1.67 billion. Despite price hikes, Netflix is also encouraging customers to consider its advertising-funded plan as it sees potential for increased profitability in this model. Netflix is looking to expand its offerings with physical destinations that combine shopping, dining, and Netflix “experiences.”
Netflix’s decision to raise prices reflects its desire to maintain profitability and fund new initiatives while capitalising on its popularity. These adjustments may become an annual occurrence, akin to traditional pay TV services, as Netflix strives to balance costs and protect its bottom line in an evolving competitive landscape. Following this announcement, Netflix shares surged over 10% in after-hours trading.
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