Netflix has started increasing subscription prices in several countries as the surge in growth, driven by its crackdown on password sharing, begins to taper off.
Over the past month, the streaming giant has already raised fees in regions like Japan, parts of Europe, the Middle East, and Africa. Changes in Italy and Spain are also currently rolling out.
In its latest financial report, Netflix revealed that it had gained 5.1 million new subscribers between July and September, surpassing projections but marking its smallest quarterly growth in over a year.
With 282 million subscribers globally, the company now faces the challenge of sustaining growth, as its extensive reach makes it increasingly difficult to attract new members.
In response to signs of a slowdown back in 2022, Netflix introduced initiatives to curb password sharing and launched a new ad-supported streaming plan, both of which sparked renewed growth.
Since then, the company has added more than 45 million subscribers, but it remains under pressure to demonstrate what will fuel future growth.
While Netflix’s ad-supported plan—its least expensive option—has been gaining traction, accounting for 50% of new sign-ups in areas where it is offered, the company has cautioned that it does not expect advertising to significantly drive growth until next year.
Despite this, Netflix continues to show strong financial performance, with revenue in the July-September period rising 15% year-over-year to more than $9.8 billion, while profits climbed from $1.6 billion to $2.3 billion.
The last price increase in the UK and US took place in 2023, but only affected select plans, with the popular “standard plan” remaining unchanged since 2022.
Historically, Netflix has tested price adjustments in smaller markets before implementing them in larger regions like the US and UK.
Matt Britzman, a senior equity analyst at Hargreaves Lansdown, noted that Netflix’s solid financial standing allows the company to continue investing in new content, which is essential to justify price hikes without alienating subscribers.
“The addition of fresh content, especially in areas like sporting events, could give Netflix the edge it needs to push prices higher and keep customers loyal,” he said.
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