Netflix Raises Prices as Password Boost Fades

Netflix has started raising its subscription prices in several countries as the surge in growth from its password-sharing crackdown begins to ease. Over the past month, the streaming giant has increased fees in Japan, parts of Europe, the Middle East, and Africa, with changes now being introduced in Italy and Spain.

In its latest quarterly results, Netflix reported adding 5.1 million subscribers between July and September, surpassing expectations but marking its smallest increase in over a year. With a global subscriber base of 282 million, the company is facing increasing pressure to maintain growth, as finding new subscribers becomes more challenging.

Netflix’s response to previous slowdowns, like in 2022, involved tackling password sharing and launching a more affordable ad-supported streaming option. These strategies spurred significant growth, bringing in more than 45 million new members over the past year. While analysts predict that advertising will eventually become a major revenue driver for the company, Netflix cautioned that it is still early in the process and does not expect ads to contribute significantly to growth until next year.

Despite this, the ad-supported plan accounted for half of new sign-ups in regions where it is available during the last quarter. Even without the full impact of advertising, Netflix’s revenue for the July-September period grew by 15% compared to the same time last year, reaching $9.8 billion. Profits also rose from $1.6 billion to $2.3 billion year-over-year.

Although Netflix last raised prices in the UK and US in 2023, those increases only affected certain plans. The price of its popular ad-free “standard plan” has remained unchanged since 2022. The company has previously tested price hikes in smaller markets before rolling them out to larger ones like the US and UK.

Matt Britzman, a senior equity analyst at Hargreaves Lansdown, noted that Netflix’s financial strength allows it to continue investing in new content, a crucial factor if the company hopes to raise prices without losing subscribers. He emphasized that fresh content, especially in areas like sports, could help Netflix justify higher fees and retain customers in a competitive market.

One of Netflix’s recent successes includes the drama Baby Reindeer, created by Scottish comedian Richard Gadd, which won four Emmy Awards last month.