Netflix continues to be the dominant force in the streaming space as many of its rivals have faltered. The company is coming off the recent, surprising success of its paid-sharing program, kicking people out of using each other’s passwords. This has required them to get their own accounts, or be added to existing accounts for extra money. While some predicted mass cancellation, it actually led to Netflix’s largest subscriber growth in ages.
The last price hike was increasing the basic plan from $9.99 a month to $11.99 a month in the U.S. in 2023. Now, analysts believe another hike is coming this year, and Netflix has already been teeing this up previously.
Netflix co-CEO Greg Peters on the Q4 2023 earnings call said, “[We] largely put price increases on hold [during the rollout of the paid-sharing program] because we saw that as a form of substitute price increase. Now that we’re through that, we’re able to resume our sort of standard approach toward price increases. And price increases, you’ve seen us do that in the U.S., U.K. and France. Those changes went well better than we forecasted.”
Netflix is essentially saying here that it will keep increasing prices because it can. The hikes are not leading to widespread cancellation.
Instead, most people are sticking around, and as such, Netflix’s revenue goes up, pleasing shareholders.
So, when is this happening? Again, Peters:
“We will continue to monitor other countries and try and assess… when we’ve delivered enough additional entertainment value” to “ask [customers] to pay a bit more to keep that positive flywheel going and we can invest in more great films, series and games for those members. So, you know, the summary statement might be, ‘Back to business as usual.’”
The argument that Netflix has been investing in great films, series and games for its members is a bit wobblily. While it does have its share of hits, that comes with an overwhelming amount of big misses or abrupt, upsetting cancellations.
This is opposed to say, Apple TV+ which has a much higher batting average per show. But Apple TV+ also has a fraction of Netflix’s subscribers.
The idea is that Netflix is trying to squeeze out competitors and get customers’ streaming budgets allocated toward them. Who cares about a $2 price increase if you decide you no longer need Peacock, Paramount+ or Apple for $9 each?
All of this is very cynical, but it’s working.
Netflix is seeing no ill-results from constantly demanding more money from its users, whether that’s normal price increases or something like the paid-sharing program. So, enjoy another $2 hike, most likely, sometime soon.
This article was first published on forbes.com and all figures are in USD.
