Netflix is increasing its prices in select countries as the growth surge from its crackdown on password sharing starts to slow down. The streaming giant has already raised subscription fees in Japan, parts of Europe, the Middle East, and Africa over the past month, with changes now being rolled out in Italy and Spain.
In its latest financial report, Netflix revealed that it added 5.1 million subscribers from July to September, exceeding expectations but marking the smallest quarterly increase in over a year. With its vast existing subscriber base, the company is facing pressure to identify new growth drivers, as acquiring new members becomes increasingly challenging.
The last significant slowdown occurred in 2022, prompting Netflix to launch measures to curb password sharing and introduce a new ad-supported streaming plan, which sparked renewed growth. Since last year, the company has gained over 45 million new subscribers, reaching a total of 282 million globally.
Analysts anticipate that advertising will eventually become a significant revenue stream for Netflix. However, the company has cautioned that it is still in the early stages and does not expect advertising to drive growth until next year, even though the ad-supported plan accounted for 50% of new subscriptions in regions where it is available during the latest quarter.
Despite the limited impact of advertising, Netflix’s revenue for the July-September quarter rose by 15% year-on-year, reaching over $9.8 billion (£7.5 billion). Profits also increased, climbing from $1.6 billion last year to $2.3 billion.
While Netflix last increased prices in the UK and US in 2023, the adjustments were limited to specific plans, leaving the price of the “standard plan” without ads unchanged since 2022. The company has previously tested price changes in smaller markets before implementing them in major ones like the US and UK.
Matt Britzman, a senior equity analyst at Hargreaves Lansdown, noted that Netflix’s robust financial position enables it to continue investing in new content, which is crucial if the company intends to raise prices without losing customers. He emphasized the importance of fresh content, particularly in areas such as live sports, to maintain the value proposition and stay competitive in the market.
One of Netflix’s major recent hits is “Baby Reindeer,” a drama created by and starring Scottish comedian Richard Gadd, which won four Emmy Awards last month.
