After its biggest subscriber gain since 2020, Netflix continues to flex its pricing power
’Flix flex… Netflix is back in #GainzMode. The streamer smashed growth expectations, adding 8.8M global subscribers last quarter, 3M+ more than Wall Street expected. It’s Netflix’s biggest quarterly net subscriber gain since the lockdown boom of 2020, when it added 10.1M homebound viewers in the second quarter. Revenue and profit grew last quarter as Netflix’s password-mooching crackdown paid off (and lured your ex to finally get their own account). Netflix’s new ad-supported tier also seems to have been a good play, for two reasons:
Accessible: Netflix’s ad-plan members grew 70% quarter over quarter as budget-conscious Americans were drawn by the cheaper option (starts at $7/month).
Profitable: While ad tiers cost less, they tend to have better profit margins than costlier ad-free subs. It’s why streamers like Netflix, Disney, and Warner Bros. Discovery are trying to steer customers toward those plans.
Pushing its limits... Despite the strong growth, Netflix announced it’s going to raise prices again for some of its plans. Its ad-free premium plan will rise from $20/month to $23. Netflix’s basic plan (which was discontinued except for existing customers) will rise from $10 to $12 (possibly to drive customers to the cheaper ad tier). There hasn’t been much new content on Netflix since the Hollywood strikes, so it’s a bold move to keep raising prices.
Range gives you pricing power… so does popularity. Netflix’s growth last quarter, coupled with its status as the streaming leader, gives it confidence that it can pull off price hikes without losing subs. But it’s also a matter of giving customers options: Netflix’s US monthly plans range from $7 to $23, a wide spread for different budgets. The company said its US starting price is “extremely competitive.” And if folks do move down to the ad tier, it could mean better margins.