Daily Mail: Netflix 'expected to raise prices again' - months after previous hike

Story from Daily Mail:

Netflix is expected to hike its prices again this year, analysts warn - just months after the last increase.

'We expect to see rate increases this year', UBS Securities' closely-watched analyst John Hodulik said in a note about Netflix this week.

Last October, Netflix axed its 'basic' $9.99 per month ad-free plan for new members - and upped it to $11.99 for existing members.

It means its cheapest plan without commercials for new joiners is the 'standard' one at $15.49 a month.

Netflix typically increases monthly prices by between $1 and $3 - so a rise in the middle of that range could push the standard plan up to $17.49 a month.

See our interactive graphic here for Netflix price rises over time.

With commercials, customers new and old pay $6.99 a month - the new entry level 'standard with ads' tier introduced in 2022. That could go up to $7.99 with a $1 price rise.

The top tier 'premium' service that has the super-detailed 4K resolution and allows four users at a time increased by $3 to $22.99 in October last year. A similar rise would push that to $25.99 - or about $312 a year.

Along with a ramp up in revenue from its ad-supported service and subscriber gains following password sharing crackdown, UBS analysts forecast the expected price rises this year could double the company's revenue growth.

They predicted the hike should push the company's total revenue growth in 2024 to 15 percent, compared with 7 percent growth in 2023, Variety reported. 11-Netflix has not officially announced plans to increase subscription prices in 2024, but executives have previously said hikes are on the table.

On the 2023 fourth quarter earnings call, Netflix co-CEO Greg Peters said the streaming giant had 'largely put price increases on hold' while it was rolling out its password-sharing crackdown.

The service announced it added 13 million new subscribers last year as password 'borrowers' were forced to create their own accounts - despite causing uproar when it implemented the rule in May.

Peters said he saw the clampdown as a 'form of substitute price increase.'

'Now that we're through that, we're able to resume our sort of standard approach toward price increases,' he said. 'You've seen us do that in the US, UK and France. Those changes went well better than we forecasted.'

Netflix reported a fourth-quarter net income of $937.8 million - up from $55.3 million in the fourth quarter of 2022.

After launching in 2011, Netflix kept prices mostly flat.

But, since 2016, Netflix has been steadily increasing the prices of its different services, usually around every two years. Our interactive graphic higher up in the story shows how prices have changed - and when new plans have been introduced.

For example, in October 2017, subscribers with the standard and premium subscription options found out that they would have to fork out an extra $1 a month.

May 2019 marked the first time that the streamer increased the price of its cheapest subscription option. Netflix basic subscribers had to pay $1 more a month - up from $7.99 to $8.99. The standard and premium subscription plans went up $2 - to $12.99 and $15.99, respectively.

In October 2023, as well as axing its $9.99 basic plan, Netflix also increased its premium ad-free plan, which allows users to add two extra members from different households - from $19.99 to $22.99 a month.

In the note, UBS analysts raised their 12-month price target on Netflix shares from $570 to $685 per share.

They also cited Nielsen data showing Netflix's share of US TV viewing rose to 7.9 percent in January 2024, up from 7.7 percent in December.

'As the objective in streaming shifts from subscriber growth to profitability for the traditional media companies, we see Netflix as the ultimate beneficiary of this industry rationalization,' the analysts wrote.

UBS predicted the streamer would add 20 million subscribers in 2024 - up from an original estimate of 18 million.

'While we expect net adds to slow, we believe Netflix still has significant runway as it continues to convert users to paid subs and attracts new cohorts,' the note read.

Other experts have also declared that Netflix has won the streaming wars. They say that rival services like Max, Disney and Peacock are letting Netflix show their top films and shows - a sign their own services are struggling for subscribers.