Netflix Announces Price Increases Following Subscriber Growth
Riding the wave of its recent spike in new subscribers, Netflix has announced an increase in the cost of its subscription plans in the U.S. and several other regions.
In the U.S., the price for Netflix’s budget-friendly ad-supported plan will rise to $7.99 a month, up from its initial price of $6.99 set in 2022. The Standard plan, which is the most subscribed, will see a price increase to $17.99 from $15.49. Additionally, the top-tier Premium plan will now cost $24.99, reflecting a $2 increase. However, the cost to add an extra user to the ad-supported plan under Netflix’s paid password sharing option will remain at $6.99.
Netflix explained in its quarterly shareholder letter, “As we continue to invest in high-quality content and enhance the value we offer to our members, we occasionally need to ask our members to pay a bit more. This allows us to reinvest and further enhance the Netflix experience. Consequently, we are updating our pricing today for most plans in the U.S., Canada, Portugal, and Argentina (already included in the 2025 forecast we shared in October 2024).”
This pricing adjustment follows Netflix’s report of a record-breaking addition of 19 million subscribers in the fourth quarter ending December 31.
Media Analysis
Despite consumer concerns about ongoing inflation, particularly within the price-sensitive streaming industry, financial analysts have long recognized Netflix’s potential to enhance its profit margins through strategic price increases. Typically, Netflix experiences a slight drop in subscribers initially after a price increase, but the pattern has shown that most customers remain, and the value of new or returning subscribers increases with the higher pricing.
The most notable price adjustment is for the advertising-supported tier, which accounted for 55% of all new subscriptions during the quarter. Last fall, Netflix reported that this tier had exceeded 70 million monthly active users. The company does not specify subscriber numbers for each individual plan.
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