Netflix holds off on US price hike despite competitor increases

Netflix has opted not to increase its subscription prices in the United States, at least for now, even as competitors like Disney+ and Peacock have raised their fees. During the company’s third-quarter earnings call, Netflix co-CEO Greg Peters highlighted the company’s approach to pricing, focusing on the value provided to its members rather than benchmarking against competitors. The streaming giant surpassed third-quarter expectations, adding over 5 million subscribers, which resulted in a 10% surge in its stock price in after-hours trading, reaching an unprecedented high of approximately $760.

Financial analysts have observed that a potential price increase could positively influence Netflix’s stock performance in the near future. This insight follows Netflix’s recent biannual viewership report, which disclosed that subscribers watched over 94 billion hours on the platform between January and June. According to Citi analyst Jason Bazinet, there is room for a 12% increase in US prices by 2025, considering the low cost per viewed hour.

Netflix’s last price adjustment occurred in January 2022, when the Standard plan’s monthly cost increased from $13.99 to $15.49. The Premium tier experienced a $2 hike, bringing it to $19.99 a month, with an additional increase to $22.99 in October of the same year. Recently, Netflix phased out its lowest-priced ad-free streaming option, positioning the $15.49 Standard plan as its most affordable ad-free choice.

As for its ad-supported plan, introduced less than two years ago, Netflix has maintained the price at a competitive $6.99 per month, one of the most economical among major streaming services. Peters expressed enthusiasm for this plan, citing its low price point and greater accessibility as significant advantages.

Internationally, Netflix has increased subscription prices in regions such as Scandinavia and Japan. The company announced plans to extend these price adjustments to Spain and Italy. In the United States, Netflix will continue to assess factors such as user engagement, acquisition, and retention to determine the optimal pricing strategy for consumers.

Peters reiterated the company’s commitment to offering a variety of plans tailored to consumers’ needs, assuring that Netflix will evaluate and evolve these offerings as needed. This cautious approach reflects Netflix’s focus on balancing value and affordability for its subscribers.

The third-quarter earnings call not only underscored Netflix’s impressive subscriber growth but also its strategic restraint in pricing amid a competitive streaming market. As the company continues to expand its global reach, it remains vigilant in adapting its pricing to meet the diverse needs of its worldwide consumer base.

Source: Noah Wire Services