Price Hike for Some Netflix Subscriptions
Streaming giant Netflix has announced that it will be increasing the prices of some of its subscription plans in the UK. The basic plan will see a £1 increase from £6.99 to £7.99 per month, while the premium plan will go up by £2 from £15.99 to £17.99 per month.
Reasons behind the Price Increase
This price hike comes after Netflix cracked down on password sharing, losing one million subscribers earlier this year. However, the company added nearly nine million subscribers in the three months leading up to September. The introduction of an extra fee to allow more than one household to share the same account accounted for the majority of new sign-ups.
The Strategy behind the Price Increase
Netflix's decision to raise prices is seen as an attempt to push customers towards the advertising-funded plan, which could drive higher profits. The company also introduced a cheaper plan with ads, which accounted for about a third of the new sign-ups in countries where it was available.
Options for New Subscribers
New subscribers will no longer have the option to sign up for the current ad-free basic plan. Instead, they will be offered the premium plan at £17.99 or a standard plan with ads for £4.99. A standard plan without ads, allowing streaming on two devices at once, will be available at £10.99.
Previous Price Increase and Market Reaction
Netflix last raised its prices in March 2022. Despite the price hike, the company reported a 7.8% increase in quarterly revenue and a profit of £1.37 billion. The market reacted positively to the news, with the company's shares soaring 16% in early trading on Wall Street.
Analyst Comments on Netflix's Turnaround
Quilter Cheviot equity research analyst Ben Barringer commented on Netflix's recent success, saying, "After a difficult couple of years, Netflix's turnaround is complete as its recent efforts to crack down on password sharing and subscribers leaving have paid off."
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