Netflix Has No Plan to Raise Subscription Prices in the US for Now
Netflix Has No Plan to Raise Subscription Prices in the US for Now
Engagement is up on Netflix year-over-year, and that could be a factor in keeping the streamer’s prices stable.
Netflix once again captured the attention of the media on Thursday. It wasn’t the premiere of a new series or an acquisition of new sports rights that prompted Hollywood news outlets to fire up their typewriters, it was another earnings report that showed Netflix had once again put the competition to shame. Netflix added another 5 million customers in the third quarter of 2024, and while many analysts expected the announcement of a price increase to accompany the report, no such news was handed down. One reason for this lack of action may be the consistently increasing levels of engagement on Netflix, which may be driven by the streamer’s efforts to crack down on password-sharing.
Key Details:
- Account-owning households saw engagement with Netflix increase year-over-year during the first three quarters of 2024.
- Officials reiterated that they have to continue delivering more value to justify a price hike.
- Recent price increases in other global territories will help give Netflix more of an idea as to their potential impact domestically.
Netflix officials weren’t shy about discussing the streamer’s password-sharing restrictions, which they refer to as “paid sharing” as a way to point to subscribers’ ability to pay to add a viewer outside their household to their account.
Company co-CEO Ted Sarandos said that paid sharing has driven engagement down in some households, since people who were sharing their accounts now have fewer people watching. In addition, those who were sharing someone else’s password and now have their own Netflix subscription aren’t creating net new engagement, since they were watching the service previously.
However, when taking those viewers out of the equation, engagement increased on Netflix so far this year.
“When you isolate owner households (which excludes the impact of paid sharing), view hours for those owner households rose year over year in the first three quarters of 2024,” Netflix said in its Q3 shareholder letter.
Is Increased Engagement Keeping Prices Down?
The boost in engagement from account owner households could be having an effect on the company’s decision not to raise prices. Co-CEO Greg Peters didn’t completely confirm that when asked about pricing, pointing instead to the company’s “remarkably consistent” approach to the cost of its service in past years.
“Our core theory is, we’ve got to work really, really hard to make sure we are delivering more value to members every quarter,” Peters said Thursday. “Then, we assess based on how that’s going, through metrics like engagement, acquisition, and retention, did we do a good job there? How we actually deliver that promise of more value. If we do, then we occasionally ask members to pay a bit more, so we can invest that forward and keep that whole process going.”
Perhaps the company thinks it’s more important to continue increasing engagement among owner homes before it tries to raise prices. Or maybe the fact that former sharers aren’t causing a net increase in engagement yet means the company is waiting until they’re more hooked on Netflix to hike prices.
In any case, Netflix has been willing to increase rates in other areas around the globe recently. Peters pointed to price hikes in Europe, Scandinavia, and Japan, saying so far the results had been “in line with expectations.”
“We’ll look at those signals and we’ll figure out where and when we think it’s appropriate to ask those members to pay a little bit more as well,” Peters said.
For American customers, all this adds up to the price of Netflix being left in a holding pattern. Paid sharing initiatives may have held off price increases for the streamer, but Netflix will raise prices in the future eventually. The only question is how long it will take.
Netflix
Netflix is a leading subscription-based video streaming service that offers on-demand access to an extensive library of over 3,000 movies, 2,000+ TV shows, and a growing collection of acclaimed Netflix originals. Renowned for producing groundbreaking content, Netflix has become a cultural powerhouse with hit originals like “Stranger Things,” “Wednesday,” “Squid Game,” “The Crown,” “Tiger King,” “Bridgerton,” “The Witcher,” and “Black Mirror.”