(VOR News) – The subject of whether Netflix plans to raise the cost of its streaming memberships has come up again as the company approaches its third-quarter results.
In the United States, Netflix charges $6.99 a month for its ad-supported subscription. The service has monthly fees of $15.49 for the Standard tier and $22.99 for the Premium tier. There are no adverts on either choice.
The streaming giant raised the price of the Premium tier and the now-canceled Basic plan for US customers in the fall of the previous year, which was the most recent price rise.
Netflix subscription costs rose in France and the UK simultaneously.
In a research report released on October 9, Oppenheimer & Co. predicted “a premium pricing escalation for additional regions, and notably, an 8%-15% rise in the Standard plan.”
According to the company’s representative, Jason Helfstein, the price of Netflix’s Standard plan in the US hasn’t changed since January 2022, when it was raised by $1.50.
The NFLX Standard Plan was 53% more expensive than its rivals in January 2022; this has since dropped to 4%. He pointed out that the pricing of the plans is currently 18%, 9%, and 3% less in the US than those of Hulu, Max, and Disney+, respectively. “Additionally, a 15% increase corresponds to a 23% discount on the Premium plan, consistent with the historical average.”
According to Helfstein, “Robust third-quarter viewership and the fourth-quarter content lineup, featuring the NFL, should further mitigate churn risk.”
In order to account for the potential for an increase, Oppenheimer raised its estimates by 2% for the average revenue per member for the fourth quarter and fiscal year 2025.
Senior media tech analyst Tim Nollen of Macquarie US Equity Research increased his target price for Netflix on Friday. “He expressed confidence in the long-term viability of its advertising tier, supported by sports content and prospective price hikes,” according to a study he conducted.
Nollen changed his mind and decided to raise his goal price. Before the third-quarter results were revealed, the memo offered information about media technology companies.
The analyst predicts that there might be a spike in American subscribers soon.
According to Macquarie’s research study, Netflix has a lot of pricing power because it hasn’t raised the price of its regular tier since January 2022, but both Hulu and Max have increased in price relative to Netflix’s basic plan.
“Netflix can also reduce churn, as it offers the most affordable video streaming service at $6.99 with no advertisements, demonstrating its compelling price-to-value ratio.”
Executives from Netflix have told investors and analysts that the firm takes into account metrics like participant engagement, member retention, and member acquisition when deciding when to raise membership fees.
Netflix co-CEO Gregory Peters said earlier this year that the company did not raise subscription prices during the campaign because it saw the company’s efforts to prevent password-sharing as a “substitute price increase”.
The previous year, Netflix started to strictly limit account sharing to people living in the same house. As a result, those who did not live in the same house had to either purchase a new membership or sign up as a “extra member” on an already-existing subscription account.
They cost $7.99 more a month in the US, but the “extra members” have increased the streaming behemoth’s customer base and earnings.
“We provide various pricing options to enable consumers to choose a plan that most appropriately aligns with their circumstances and requirements,” the company claims on its website. “We provide a range of pricing alternatives for consumers.”
This enables us to make service improvements to improve our members’ experiences. In addition, we constantly modify the prices. In order to improve our understanding of customer demand, we also assess different pricing tactics, such as offering different plans and price points.
More than 190 nations around the world have access to Netflix and its content on its website.
SOURCE: FBN
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