Netflix Maths: More Subscribers = Higher Prices

The latest Netflix results revealed the company added 8.76 million from around the world in the third quarter of 2023. Wall Street had expected this to be a mere 5.49 million. Revenue was up to $8.54 billion from $7.93 in the same quarter the year before. Despite this success, the streamer has decided to up its prices again.

The ad-supported tier is staying at $6.99 per month and the standard plan is sticking at $15.49 per month. However, the basic plan is going up from $9.99 to $11.99 and the premium plan will cost $22.99 a month instead of $19.99. The new prices kick in next Wednesday.

In the UK,  the cost of the basic plan is rising by £1 a month to £7.99. The premium plan is going up £2 per month and will cost £17.99. 

All this comes despite the evidence suggesting the Netflix war against password sharing is working. There was

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, told BBC News:

Management’s working hard to squeeze every last drop of cash possible from the available subscriber base. 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.

A briefing from Enders analysis noted:

Paid sharing and “price optimisation” are returning clear benefits for Netflix…However, success of the advertising tier remains slow.

Netflix is and (probably) always will be popular. However, in a time of increasingly squeezed income there is a certain point at which customers will say enough is enough and use other, cheaper services. The company has clearly done its research and thinks it is not at the crunch point yet. 

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Despite being one of the more expensive streamers, unlike many of its rivals, Netflix does not show any real live sport. While it is preparing to broadcast its first such event next month, I remain unconvinced that the pro-am golf tournament featuring PGA players and F1 drivers is going to do anything to draw in new subscribers.

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