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Netflix adds 8.8m subs; raises UK price

October 19, 2023

Netflix has announced that it is raising the price of some of its subscription plans in the UK.

The streaming service said the price of its basic, ad-free subscription would rise from £6.99 a month to £7.99, while its premium subscription would rise from £15.99 to £17.99. Subscription prices will also rise in the US and France.

The latest price hike comes as the company revealed it added 8.8 million subscribers in Q3 – above estimations – partly driven by its crack down on password sharing. Netflix said it expected a similar number of subscribers in Q4. The company posted revenue of $8.54 billion (€8.1bn). Share prices rose 13 per cent on the news.

Industry Reactions

Commenting on the results, David Poole, senior technology and media strategist at Publicis Sapient, said:  “Netflix Q3 earnings revealed that its paid sharing helped it achieve $8.5 billion in revenue and will likely continue to boost revenue as it gets rolled out. While ad plan membership is up 70 per cent last quarter, ad revenue will not be material until 2024, however a price increase to ad-free plans in Q4 will certainly be of note to markets.
Netflix last increased its price in 2022, and the new hike would help to cover higher costs for content after the recent negotiations with Hollywood writers, actors, and directors. But with data showing that teenagers and Gen Z as a whole are spending much more time on YouTube than Netflix, there is huge pressure to maintain subscriber engagement and any significant price increase will make it that much harder to rival YouTube. With a number of C-suite changes at Netflix throughout 2023 including replacing its President of Advertising last week, it’s a delicate time for the company and Q4 results are likely to highlight just how much work it needs to do to get back on track with the growth levels it saw pre-2022.

A longer-term growth play by Netflix is merchandising its IP. In Q3 it added interactive ecommerce from within the browser experience, selling Gen V merchandise and also made mobile games more prominent in the app, including games that build on Netflix franchises. It’s also moving into retail with the launch of Netflix House retail stores selling merchandise. Netflix is smart to apply Disney’s flywheel approach to leverage its content across channels.”

Damian Garbaccio, Chief Business & Marketing Officer at Affinity Solutions, said: “For marketers, Netflix’s Q3 earnings should be a strong signal into consumer consumption and spending when it comes to TV and content subscriptions. As the popularity of ad-supported CTV content continues to grow and more inventory is made available, streaming players must prove the value of advertising on their platform in order to win ad dollars. The next phase of CTV will see streamers using true outcomes based metrics to bridge the gap between TV viewership and actual buying habits, enabling advertisers to optimize their campaigns and drive measurable results.”Britt Augenfeld, Vice President, Advanced TV and Video at search intelligence platform Captify, commented:  “Netflix earnings call will be one of interest with the recent cutdown on subscription/ per household model combined net new subscribers having to buy into a commercial based subscription. Both of these signs show us that Netflix is trying to find its footing in an ads business in an era where streaming continues to take over TV viewership. Let alone at a time where fresh content will be scarce due to the SAG-AFTRA strike and where streaming services continue to compete for attention and priority. As pricing goes up for streaming services – Disney, Apple, Hulu all increasing their monthly fees – it feels like customers, on a household level, need to truly evaluate the specific content their family watches and tie it to a streaming service to evaluate what they want to pay for and what to keep. With all the price increases and economic limitations on a household level, viewers will need to pick and choose what they watch the most vs. having the luxury of having as many services as possible – now more than ever. Netflix’s more affordable ad-supported model combined with their massive catalog could make it easier for them to make the cut. As prices go up and ad supported options take over – is streaming becoming a more so like a traditional TV model?”

Tony Marlow, CMO at LG Ad Solutions, said: “Netflix’s Q3 earnings highlight the growing viewer acceptance of ad-supported streaming content. Netflix’s previous earnings call showed that users of the ad-supported tier proved to be more profitable on a per-user basis than pure subscribers. As a result, Netflix sunset its basic subscription tier and today’s earnings show that this move drove increased usage of the ad-supported model. The future of ad-supported streaming seems poised for further growth. According to our latest study results, 24 per cent of streamers intend to add more ad supported CTV usage in the next 12 months. This represents a win for all involved, users get the content they want for free or on a subsidised basis, marketers gain the opportunity to connect with consumers on the largest screen in the home via streaming and the content providers are able to optimise their revenue models to provide the greatest choice for their customers than ever before.”

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