Netflix (NFLX) -) is planning to once again have subscribers pay more out of pocket monthly for its service. The streaming giant, with over 238 million paid subscribers worldwide, is expected to announce price hikes soon after Oct. 18 when it reports its third-quarter earnings for this year.
The planned price increase will come as Netflix has seen a 15% decrease quarterly, and 29% decrease yearly, in its top-10 viewership hours, according to analysts at Raymond James. For Netflix, “content was slower this quarter, with only two English language series breaking the 100M hour mark in a given week: Season 4 of Sex Education near the end of the quarter and the debut season of One Piece,” they said in a new report.
The last time Netflix increased its prices was at the start of 2022. The company began charging customers $9.99 a month for its basic plan, $15.49 a month for its standard plan and $19.99 per month for its Premium plan. The company then nixed its basic plan and introduced a another plan that will allow customers to stream content for $6.99 a month, but with ads.
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The company has avoided blatantly raising prices ever since its 2022 price hikes due to Hollywood’s writers and actors strikes. The writers strike ended on Sept. 27, with the Writers Guild of America successfully landing a new contract, but the SAG-AFTRA’S actors strike is still ongoing as the union is still in negotiations with big studio executives.
One of the reasons Netflix may be planning to raise prices after actors strike concludes is because the additional revenue could help the company pay for wage and residual increases associated with the settled contracts. While discussing the company's second-quarter earnings in a call in July, Netflix Chief Financial Officer Spencer Neumann said that both strikes may create “lumpiness” in the company’s cash flow between 2023 and 2024.
During Netflix’s upcoming third-quarter release, analysts are also expecting long discussions about the results of the company’s crackdown to end password sharing earlier this year. According to Raymond James, Netflix has seen a slow increase of customers switching to premium plans which allows users to add up to two people to share passwords with.
“We have seen initial figures fairly solid as password sharers took the news in stride and either traded up to premium plans or got their own plans,” said Raymond James in the report. “However, Netflix’s commentary indicated that the rollout was likely to progress over the course of several months, and viewership figures since suggest a weakening of engagement that would not align with broader paid sharing uptake. While this quarter’s content slate was a weaker one, it does raise eyebrows as to the pace of the plan’s progress.”
