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The Netflix price hike hasn't fared well with fans. Netflix is raising its UK basic service fee by £1 to £7.99 and the premium option by £2 to £17.99. The company gained 8.8 million new subscribers from July to September, the highest in over two years.
Some customers are canceling memberships due to the password-sharing crackdown. Contrarily, many are becoming full-paying subscribers. This, in turn, helped Netflix compete with Disney+, HBO Max, and Amazon Prime Video.
In the US, the premium plan will now cost $22.99 per month, up by $3. On the other hand, in France, it will be €19.99, up by €2. Despite rising competition, prices, and delays from a Hollywood strike, Netflix remains optimistic.
The Netflix price hike doesn't sit well with fans
Netflix has also introduced a cheaper, ad-supported plan. This accounted for 30% of new sign-ups where available. Sophie Lund-Yates, a lead equity analyst, emphasized the need for Netflix to plan for future growth.
She said:
"As that cup begins to run dry, it will be a lot more important to understand exactly how successful the next phase of growth can be."
Furthermore, in a letter to the stakeholders, Netflix has clarified its stance on price increment by saying:
“As we deliver more value to our members, we occasionally ask them to pay a bit more...Our starting price is extremely competitive with other streamers, and at $6.99 per month in the US, for example, it’s much less than the average price of a single movie ticket.”
Despite Netflix's clarification on the price hike, fans haven't reacted well to the news.
Netflix price hike: What is the reason behind it?
Netflix described the past six months as "challenging" due to strikes by writers and actors. The company's Co-CEO, Ted Sarandos, said they are fully committed to resolving the actors' strike. Talks with SAG-AFTRA, the actors' union, stalled over disagreements. Furthermore, it emphasized the need for a quick resolution, citing the impact on the industry and economy.
Netflix remains profitable and aims to grow earnings. To do this, it's promoting a lower-priced ad tier. This allows Netflix to charge consumers less while increasing ad rates over time.
In a letter to the shareholders along with the Q3 revenue, Netflix said:
“As a result (of the double strikes which halted new content creation), we expect 2023 cash content spend of around $13B and, assuming the SAG-AFTRA strike is resolved in the near future, we are currently expecting cash content spend of up to ~$17B in 2024.”
In the same letter, Netflix also said:
“We want to sustain that virtuous cycle because when we partner with the best creators, we can delight our members, invest more in amazing TV series, movies, and games, and build an even more valuable business.”
Netflix has an exciting lineup for the next month. It will broadcast its first live sports event, The Netflix Cup, on November 14. The service is also launching a Squid Game reality show and a Scott Pilgrim anime in November. Thus, the news might affect the monumental lineups Netflix has in store for fans.
