Netflix is starting to raise prices in some countries as growth spurred by its crackdown on password sharing starts to fade. The streaming giant told investors that it is “working to improve our monetization by refining our plans and pricing” and has already increased prices in Japan and parts of Europe, the Middle East, and Africa over the last month.
In Italy and Spain, the price hikes will start this week. This update comes as Netflix reported adding 5.1 million subscribers in the three months ending in September, the smallest number in over a year. The company is under pressure to show investors what will power growth in the years ahead, as finding new subscribers becomes more challenging with its already massive reach.
The last time Netflix saw signs of a slowdown in 2022, it launched a crackdown on password sharing and introduced a new streaming option with advertisements, which led to a new wave of growth. The company has since added more than 45 million new members, bringing its total subscriber count to over 282 million worldwide.
Analysts anticipate that advertisements will eventually become a significant revenue stream for Netflix. However, the company has indicated that it will not start driving growth until next year, despite many subscribers opting for the ad-supported plan, which accounted for 50% of new sign-ups in the most recent quarter.
Even without a boost from advertising, Netflix reported a 15% increase in revenue in the July-September period compared to the same period last year, exceeding $9.8 billion. The company also reported a profit of over $2.3 billion, leading to a 4% rise in shares in after-hours trade as subscriber growth surpassed analyst expectations.
Netflix last raised prices in the UK and US last year, but those changes only affected certain plans, leaving the price of its popular “standard plan” without ads unchanged since 2022. The company has historically experimented with pricing in smaller countries before implementing changes in major markets like the US and UK.
Matt Britzman, a senior equity analyst at Hargreaves Lansdown, emphasized the importance of Netflix continuing to invest in creating new content to justify potential price increases and retain customers. He noted that fresh content, especially in areas like sporting events, could give Netflix the competitive edge it needs to push prices higher and maintain customer loyalty.
