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Netflix Unveils Global Price Hike Amid Surging Subscription Growth

This decision follows the Netflix's robust subscription growth, accumulating 8.8 million new members.

Netflix gaining subscribers

In its latest earnings call for Q3, Netflix confirmed an international price hike across its Basic and Premium tier plans commencing in the United States, the United Kingdom, and France. This decision follows the streaming giant’s robust subscription growth, accumulating 8.8 million new members, thereby escalating its total user base to 247.15 million. This substantial increment from the previous figure of 238 million in July signifies a positive trajectory for the company.

Netflix articulated its rationale behind the price augmentation in a prepared statement, “As we deliver more value to our members, we occasionally ask them to pay a bit more. Our starting price is extremely competitive with other streamers and at $6.99 per month in the US, for example, it’s much less than the average price of a single movie ticket.” This narrative aligns with the broader industry trend where rivals like Disney+ and Max (formerly HBO Max) have also escalated their pricing structures to offset financial adversities. Disney+ like Netflix, is also adopting measures to restrict account sharing by incessantly monitoring user activity.

The current price adjustment mirrors the last recorded hike in January 2022, which witnessed a minor surge of about $1 to $2 monthly. The Basic ad-free subscription plan, which was earlier discontinued in the US and the UK, will now cost $11.99 in the US, a jump from its previous price of $9.99. On the other hand, the Premium tier plan, furnishing 4K Ultra HD visuals on up to four devices concurrently, will now be priced at $22.99, up from $19.99. The Standard plan prices remain unaltered across all regions.

Furthermore, Netflix disclosed its intentions to phase out the Basic plan in various territories including Germany, Spain, Australia, Mexico, and Japan, starting next week. In the UK, the new pricing structure entails a rise from GBP 6.99 to GBP 7.99 for the Basic plan, and from GBP 15.99 to GBP 17.99 for the Premium plan. French customers will experience a similar trend with the Basic plan escalating to EUR 10.99 and the Premium plan to EUR 19.99..

In a letter to shareholders, Netflix reiterated, “Our starting price is extremely competitive with other streamers and at $6.99 per month in the US, for example, it’s much less than the average price of a single movie ticket.”

The streaming behemoth is also intensifying its crackdown on password sharing globally, necessitating each household to possess an individual plan. This initiative, part of its “paid sharing” program, enables users to extend their account to two additional members for a nominal monthly fee. This strategy has evidently borne fruit as the recent report indicates a decline in membership cancellations and a surge in full-paying subscribers.

In the wake of rising competition from streaming adversaries like Disney+, HBO Max, and Amazon Prime Video, this new pricing strategy coupled with its password sharing policy is a concerted effort by Netflix to bolster its revenue streams and perpetuate its investment in fresh content, fostering an enriching viewing experience for its burgeoning subscriber base.

Shares of Netflix experienced a near 7 per cent uplift in after-hours trading to $369.89 post the announcement. The price revisions were unveiled in conjunction with Netflix’s third-quarter earnings report which also highlighted a global customer addition of 9 million and a revenue tally of $8.542 billion, aligning with analyst anticipations.

Amidst the competitive fervor and labor dissonance in Hollywood, Netflix continues to spearhead viewership with its compelling content. Despite some analysts lowering their price targets for Netflix, the company’s strategic pricing and content augmentation poise it well in the streaming wars as it vies for market saturation and revenue augmentation in the rapidly evolving digital entertainment landscape.

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