Netflix has begun raising subscription prices in several countries, marking a shift as the growth fueled by its crackdown on password sharing starts to diminish. The streaming giant announced recent price hikes in Japan, parts of Europe, and regions in the Middle East and Africa, with changes now rolling out in Italy and Spain.
In its latest financial report, Netflix revealed it added 5.1 million subscribers between July and September. While this figure exceeded expectations, it represents the smallest gain the company has seen in over a year. As competition in the streaming market intensifies, Netflix faces mounting pressure to demonstrate how it will sustain growth moving forward, especially given its extensive existing subscriber base.
The last notable slowdown in subscriber growth occurred in 2022, prompting Netflix to implement measures against password sharing and introduce a new ad-supported streaming option. This strategy led to a surge in new memberships, contributing to over 45 million new subscribers within the past year, resulting in a total of 282 million subscribers globally.
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Despite the growing trend toward ad-supported plans, Netflix acknowledged that it remains “early days” in this area. The company does not anticipate significant revenue growth from advertisements until next year. However, Netflix reported that the ad-supported plan became the least expensive option, accounting for 50% of new sign-ups in regions where it is available during the most recent quarter.
In addition to subscriber growth, Netflix’s revenue for the July-September period rose by 15% compared to the same timeframe last year, exceeding $9.8 billion (£7.5 billion). Profit also increased from $1.6 billion last year to $2.3 billion this year.
Although Netflix last adjusted prices in the UK and US in 2023, those changes affected only specific plans. Notably, the popular “standard plan” without ads has remained at the same price since 2022. Historically, Netflix has tested pricing adjustments in smaller markets before implementing changes in larger ones, such as the US and UK.
Matt Britzman, a senior equity analyst at Hargreaves Lansdown, emphasized that Netflix’s strong financial position allows it to continue investing in new content. This investment is crucial for maintaining customer satisfaction and justifying potential price increases. Britzman noted, “This is inherently a fickle market, with consumers happy to swap streamers if they don’t think they’re getting value. The addition of fresh content is key to that, especially in areas like sporting events, and could give Netflix the edge it needs to push prices higher and keep customers coming back for more.”
Among Netflix’s recent successes is “Baby Reindeer,” a drama created by and starring Scottish comedian Richard Gadd, which has garnered significant attention and praise.
