Netflix is likely to raise pricing again in several areas later this year.
The warning comes from a group of analysts at Swiss banking business UBS Securities, who said customers should “expect to see rate increases” as the entertainment industry shifts. Among other things, they point out that the platform’s total American viewing increased from 7.7 percent to 7.9 percent in January 2024. Furthermore, established media organizations are increasingly turning to streaming platforms. Businesses will attempt to curate their libraries, reduce production costs, and focus more on “content licensing” to better consolidate their platforms.
Netflix, in particular, is in a strong position to benefit from the evolving landscape, implying that the firm may feel confident enough to boost pricing again. After all, they do have a number of well-regarded television shows, films, and video games. The additional revenue from the price increase, along with the income from the ad-supported tier and subscriber growth, could increase the company’s revenue by 15%.
Possible price increase
Granted, these statements are made by only one group of analysts. As far as we can tell, no one else is making a similar forecast, and Netflix has not made any explicit announcements about planned changes.
However, there are excellent reasons to expect it will occur. Variety cites a Q4 2023 earnings call in which Netflix co-CEO Greg Peters stated that the business has “largely put price increases on hold” while launching the “paid-sharing program.” He seemed to be alluding to the Extra Member option, which was adopted in 2023. However, now that the experiment is ended, Netflix intends to restart its “standard approach toward price increases.”
Of course, this might backfire. Subscribers could leave in droves. However, as Peters points out, the latest significant price increase performed “better than [they] forecasted.”
Analysis: Overconfident?
One must ponder, “Is Netflix justified in its confidence, or is it overconfident?” It could just be the former. Despite the internet backlash, the platform experienced significant growth when it implemented the password crackdown and ad-supported tiers. According to UBS Securities, Netflix “added 29.5 million net new subscribers in 2023”. The move was and will likely continue to be a big success, with analysts predicting a higher cash flow than expected well into 2027.
Another walk has the potential to be the final straw. Viewers may abandon their memberships en masse due to rising expenses, but this remains to be seen. Please take this information with a grain of salt. It is all supposition the moment.
