Netflix, one of the only profitable TV streaming services (along with Hulu), is reportedly planning on increasing the monthly price of its ad-free subscription, The Wall Street Journal reported today. However, the price bump reportedly won’t come for “a few months,” as Netflix is waiting for the actors’ and writers’ strike to formally end, the publication said.
WSJ said “people familiar with the matter” informed it that Netflix will probably launch its price hike in the US and Canada. WSJ couldn’t confirm how much prices will increase or when the increases will start. A representative for Netflix could not immediately be reached by Ars Technica for comment. Netflix declined to comment to the Journal.
The Writers Guild of America (WGA) is voting on a tentative agreement with TV and movie studios this week, while the Screen Actors Guild is undergoing negotiations.
Streaming prices keep rising
Today, Discovery+ announced that it’s increasing prices for its ad-free tier from $6.99 to $8.99 per month, effective immediately. A similar move from Netflix would follow the broader streaming industry’s trend of jacking up prices.
Netflix’s last price increase was in January 2022, when its ad-free standard plan went from $14 to $15.49 per month, and its 4K plan went from $18 to $20 per month. Those prices look a lot different from Netflix’s debut monthly pricing ($7.99 or $11.99 for 4K).
As subscriber numbers stagnate, though, Netflix has been looking for other ways to increase revenue. A price hike is one obvious way to attempt to do that. Netflix also introduced an ad plan ($6.99 per month) this year and got rid of its mid-tier, ad-free Basic plan (making the lowest price for ad-free Netflix $15.49 per month instead of $9.99 per month). The company also cracked down on password sharing, charging $7.99 per month for each user outside the main household.
As noted by WSJ today, Netflix, as well as streaming rivals Disney and Warner Bros. Discovery, have pointed to its ad-supported tiers generating higher average revenue per user than ad-free tiers. Bumping up the prices of its ad-free plan could be beneficial for Netflix by generating more revenue from ad-free users and by pushing people to its ad tier. In May, Netflix president of worldwide advertising Jeremi Gorman said Netflix’s ad tier has “nearly” 5 million monthly active users, per The Hollywood Reporter.
Netflix’s reported upcoming price rise could also help the company manage incoming costs associated with its agreements with writers and actors. As noted by The Verge, streaming services like Netflix will be required to share performance metrics with writers and increase writer residuals. The WGA believes its new contract equates to 0.2 percent ($68 million) of Netflix’s annual revenue ($31.6 billion).
In July, during its Q2 2023 earnings call, Netflix CFO Spencer Adam Neumann said that the writers’ and actors’ strikes could add some “lumpiness” to Netflix’s cash flow from 2023 through 2024.
Frequent changes in streaming services’ prices, combo packages, and content have turned cord-cutting into a complicated, pricey endeavor that’s reminiscent of cable.