Technology
Netflix Contemplates Price Hike Following Successful Password-Sharing Crackdown
Highlights
- Netflix’s crackdown on password-sharing led to a surge of approximately 6 million new subscribers in Q3.
- Speculation arises about potential price increases as Netflix sets to announce earnings, distinguishing it from rivals like Walt Disney.
- Unlike competitors, Netflix refrained from raising ad-free subscription prices this year, opting to target over 100 million non-subscribing users.
- Analysts compare Netflix’s current status to that of a utility, prompting considerations on sustained growth for a matured company.
- Reports hint at possible price adjustments post Hollywood actors strike resolution, following WGA’s approval of a new contract with major studios.
- Netflix’s resilience during the strike is attributed to its extensive international presence and robust content lineup.
- Analysts anticipate price adjustments for ad-free plans to encourage subscribers to explore tiers with advertisements, potentially boosting revenue.
- Majority of new subscribers have favored the ad-free plans, with pricing ranging from $6.99 per month for standard plans with ads to $15.49 for ad-free plans.
- Analysts foresee Netflix doubling its ad-supported viewership in the coming year through strategic tactics.
- The ad-supported tier is projected to yield around $188.1 million in revenue for Q3, with an estimated 2.8 million new subscribers.
- Wall Street expects Netflix to report its strongest quarterly subscriber additions of the year, driven by compelling content releases.
- Q3 revenue is predicted to surge by 7.7% to $8.54 billion, reflecting the fastest growth in five quarters, thanks to hits like “Sex Education” and “Virgin River.”
In recent quarters, Netflix’s strategic crackdown on password-sharing has yielded substantial gains, potentially adding around 6 million subscribers in the third quarter alone. As the streaming pioneer readies to announce its earnings, speculations are rife about possible price adjustments, a departure from rivals like Walt Disney.
Unlike its counterparts, Netflix has refrained from raising ad-free subscription prices this year. Instead, it focused on curbing password-sharing beyond household boundaries. This move targeted the substantial user base, estimated at over 100 million, who enjoy the service without a formal subscription.
According to analysts at Bernstein, Netflix is now akin to a utility in numerous markets. The challenge lies in sustaining growth for a matured company categorized as such.
Reports suggest that a potential price hike may be on the horizon after the resolution of the Hollywood actors strike, which the Writers Guild of America (WGA) recently approved after five months of industry disruption.
Netflix‘s resilience through the strike can be attributed to its robust international presence and a compelling content portfolio.
Netflix Contemplates Price Hike Following Successful Password-Sharing Crackdown
Following a lukewarm start, analysts anticipate Netflix will adjust prices for its ad-free offerings in the upcoming months. This strategic move aims to encourage more subscribers to explore the tier with advertisements, thereby bolstering revenue per user.
Since the password crackdown, a majority of new subscribers have opted for the ad-free plans. The standard plan with ads is priced at $6.99 per month, while ad-free plans start at $15.49.
Insider Intelligence analyst Ross Benes predicts that Netflix will likely double its ad-supported viewership next year through these tactics. He anticipates an increase in ad exposure for users over time, bringing Netflix in line with its industry competitors.
The ad-supported tier is projected to generate approximately $188.1 million in revenue for the third quarter ending in September, with an estimated 2.8 million new subscribers, as per Visible Alpha’s estimates.
Netflix Contemplates Price Hike Following Successful Password-Sharing Crackdown
Overall, Wall Street anticipates Netflix to report its most robust quarterly subscriber additions of the year, a testament to its content strategy. Third-quarter revenue is expected to show a notable 7.7% increase, totalling $8.54 billion, marking the swiftest growth in five quarters. This uptick can be attributed to the popularity of recent releases such as “Sex Education” and “Virgin River.”
Stay tuned for Netflix‘s official earnings report for an in-depth look into the streaming giant’s performance in this dynamic landscape
