Netflix is beginning to increase subscription prices in several countries as growth from its crackdown on password sharing starts to slow down. The streaming giant announced that it has already raised fees in Japan, parts of Europe, and the Middle East and Africa over the past month, with changes now being implemented in Italy and Spain.
In its latest results, Netflix reported adding 5.1 million subscribers between July and September—exceeding forecasts but marking the smallest increase in over a year. The company faces pressure to demonstrate to investors how it plans to sustain growth in the future, as its extensive reach makes it increasingly challenging to attract new subscribers.
In response to a previous slowdown in 2022, Netflix introduced measures to combat password sharing and announced a new ad-supported streaming option. This crackdown resulted in a surge of growth, with the company adding over 45 million new members since last year, bringing its total to 282 million subscribers worldwide.
Analysts predict that advertising will eventually become a significant revenue stream for Netflix. However, the company cautioned that it is still “early days” for its ad-supported plan and does not anticipate it driving substantial growth until next year, despite many subscribers opting for this less expensive option. Netflix indicated that the ad-supported plan accounted for 50% of new sign-ups in regions where it is available in the most recent quarter.
Without relying on advertising for growth, Netflix reported a 15% increase in revenue for the July-September period compared to the same timeframe last year, totaling over $9.8 billion (£7.5 billion). Profits also rose from $1.6 billion in the same period last year to $2.3 billion.
Netflix last raised prices in the UK and US in 2023, affecting certain plans, while leaving the cost of its popular “standard plan” without ads unchanged since 2022.
In the past, the company has sometimes experimented with pricing in smaller countries before making changes in major markets, such as the US and UK.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said Netflix’s strong financial position put the firm in a position to keep spending money to make new hits – the key if it hopes to raise prices without backlash.
“This is inherently a fickle market, with consumers happy to swap streamer if they don’t think they’re getting value,” he said.
“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.”
One of Netflix’s biggest successes has been Baby Reindeer, a drama created by and starring Scottish comedian Richard Gadd.
