In a recent announcement, Netflix unveiled a rise in the costs for its Basic and Premium subscriptions. The previously phased-out Basic plan has been resurrected and will now be $12 for existing customers, up from $10. Meanwhile, the Premium package will see an increase from $20 to $23. Notably, Netflix’s ad-supported and Standard packages remain unchanged, priced at $7 and $15.49 respectively.
In Netflix’s defense, the company has emphasized that they have kept the starting price competitive when compared to other streaming services. For instance, their $6.99 subscription cost in the U.S. is less than an average movie ticket.
Subscriber Growth amid Strategy Shift
As the streaming titan tweaks its approach post the pandemic peak, its moves, including the recent price hike, appear to be bearing fruit. The company’s latest quarterly report reveals a notable upswing in paid memberships, now at 247.15 million, marking a 10% year-on-year growth. The third quarter alone saw a robust addition of 8.76 million net subscribers – the highest annual rise.
This success might be credited in part to their crackdown on password sharing, which has translated into more individual sign-ups. Moreover, the new advertising-supported plan has gained traction, accounting for a substantial 30% of all fresh registrations in eligible countries.
Beyond Streaming: Netflix’s Foray into Retail
Another unconventional move from the streaming behemoth is its exploration into the retail space. This initiative can be viewed as an attempt to diversify revenue streams amidst increasing competition.
An Industry-Wide Trend
Netflix isn’t the only player adjusting prices. In the past year, other giants like Disney+, Hulu, and even non-streaming services such as Xbox Game Pass and Apple Music have all raised their subscription fees.
The Economic Perspective
With streaming providers across the board announcing price escalations, the era of economical streaming seems to be phasing out. A projection by The Wall Street Journal indicated that the average cost for major ad-free streaming services might leap by nearly 25% within the next year.
Furthermore, Netflix’s quarterly financial figures reflected this growth. The company witnessed a revenue rise to $8.54 billion, up from $7.9 billion in the previous year, and a 20% surge in net profit, reaching $1.68 billion.
Beyond Password-Sharing: What’s Next for Netflix?
Speculations suggest that with the success of the password-sharing clampdown, Netflix might shift its gaze to other revenue-boosting avenues. Their advertising potential remains untapped, with some experts believing its impact could be manifold compared to that of social platforms.