As it celebrates its recent success in cracking down on password sharing, Netflix, one of the world’s most popular streaming services, has announced an increase in its subscription prices in the US, UK and France.
In the United States, the premium ad-free plan will now cost $22.99 per month, $3 more than it used to. The basic subscription plan will increase by $2 to $11.99 while the prices of other plans, in the US, will remain as they were.
In the United Kingdom and France, however, both the premium and basic subscription plans will be affected. In the UK, the basic plan will now rise by £1 to £7.99 while the premium plan option will go up by £2 to £17.99.
In France, premium subscribers will pay an extra €2 for the plan that now costs €19.99; basic subscribers will now pay €10.99.
This decision comes on the heels of a significant subscriber increase. Between July and September 2023, Netflix added 8.8 million subscribers, which marks the highest growth in over two years.
It also recorded a quarterly revenue increase of 7.8% compared to the third quarter of 2022.
Part of this recent growth, however, is attributed (by Netflix) to its recent crackdown on password-sharing. As the company states, many customers who previously shared passwords have now become paying subscribers.
Netflix’s new, cheaper subscription plan with advertisements, “Standard with ads,” also contributed; it accounted for about 30% of new sign-ups in countries where it was available and saw a membership boost of almost 70% compared to the previous quarter.
Before these introductions, in the first half of 2022, Netflix lost about one million subscribers.
As lead equity analyst at Hargreaves Lansdown Sophie Lund-Yates explains: “Management’s working hard to squeeze every last drop of cash possible from the available subscriber base. As that cup begins to run dry, it will be a lot more important to understand exactly how successful the next phase of growth can be.”
Despite these challenges, Netflix remains optimistic, citing a strong content library with a mix of original hits and licensed fan favorites to retain its audience.
Simon Gallagher, who used to be Netflix’s content acquisition director, told the BBC that Netflix makes more money from subscription plans with ads. He believes that, among other reasons, Netflix increased prices of ad-free plans to nudge customers to the new plan, with ads.
“They’re certainly generating more revenue from the ad-tier subscribers than they are from the standard and premium subscribers,” he said. “So they are very motivated to push their subscribers across to that ad-funded tier.”
PP Foresight’s analyst Paolo Pescatore predicts further price increases in the future to protect profits and manage licensing and new initiatives costs, telling the BBC:
“Price rises are inevitable and we can expect this most likely on an annual basis, akin to traditional pay TV and other services.”
In addition to Netflix, which also increased subscription costs in January last year, streaming giants Disney+ and HBO Max have also hiked their subscription prices in August and January 2023, respectively.
Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — In the Featured Photo: Netflix TV dhow presentation on several screens at the Gamescom in Cologne, Germany. Featured Photo Credit: Marco Verch/CC BY 2.0 DEED.