Netflix Could Hike Prices Following Password Crackdown Success
Netflix is reportedly expected to raise prices following the success of its password-sharing crackdown.
The streaming service is set to release earnings this week that show its ban on password-sharing likely increased subscribers by about 6 million during its third quarter, Reuters reported Monday (Oct. 16).
Netflix has shied away from joining competitors like Disney in raising prices for ad-free subscriptions, according to the report. Instead, it ended password-sharing outside of households and saw its subscription numbers climb.
“Netflix now closely resembles a utility in many markets,” analysts at Bernstein said, per the report. “The challenge of being labeled a utility is how a maturing company continues finding growth.”
This month saw reports that Netflix is considering a price hike following the end of the Hollywood actor’s strike.
PYMNTS has contacted Netflix for comment but has not received a reply.
Analysts said, per Reuters, they believe Netflix will raise prices of its ad-free offerings in the months ahead to push more subscribers to the other tier, where commercials help bring in more revenue per user.
Most viewers who signed up following the password-sharing crackdown have thus far chosen ad-free plans, these analysts said in the report. Monthly ad-free plans start at $15.49, while a standard plan with ads costs $6.99 per month.
However, PYMNTS Intelligence found that cost is not the primary concern for most subscribers, with research indicating that 18% of subscribers point to cost as their top concern, while 61% prioritize enjoyment or convenience.
“This indicates that retail subscription providers should focus on delivering enjoyable and convenient experiences to attract and retain customers,” PYMNTS wrote Monday.
Meanwhile, PYMNTS earlier this month examined the connected commerce efforts that Netflix has undertaken, illustrating how far the company has come since its days of sending DVDs through the mail.
“Netflix is leveraging its content across several shows to sell action figures and clothing, among other items,” the report said. “Merchandise tied to content is nothing new, but the company is reportedly making those items available as those shows are being planned and developed, making the promos and the purchasing available from the show’s launch.”
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