Netflix has defended its decision to raise prices to up to $25 per month, with executives insisting the company’s “pricing philosophy hasn’t changed”.
During an earnings call, co-CEOs Ted Sarandos and Greg Peters were pressed on their decision to lift prices after the streaming giant announced its premium offering would bump up to $24.99.
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Netflix’s ad supported tier is set to increase by $1 from $6.99 to $7.99 while the ad-free tier would go up from $15.49 to $17.99.
Netflix co-CEO Greg Peters said the company was listening to members and had only raised prices consistent with improvements to its entertainment offering.
“Our pricing philosophy hasn’t changed. It’s pretty much the same as we’ve talked about for the last several years,” Peters told an earnings call.
“Of course, we look to continually provide more value to our members, seeking to wisely invest to increase the variety and quality of our entertainment offering.
He said the starting price for Netflix, now at $7.99 in the US, offered “incredible entertainment vlue” and was a “highly accessible entry point”.
“We listen for signals like engagement, retention, acquisition. There’s more secondary signals as well, all to tell us when we’ve achieved that increase in value,” he said.
“And when we’ve done that, then we ask them to pay a bit more to keep that virtuous cycle going.
“Ultimately we feel really good about our long-term monetization opportunity. We earn, right now, only 6% of the revenue opportunity in the countries and segments that we currently serve.”
Netflix executives said the company believed it would be able to continually increase its share of the market given improvements in its TV and film offerings.
Netflix co-CEO Ted Sarandos added that it was able to increase prices given the high quality of its content offering.
He pointed to cult shows like Squid Game, Stranger Things and Drive to Survive which allowed the company to keen asking customers to pay more.
“You know, when you’re going to ask for a price increase, you better make sure you have the goods and the engagement to back it up,” he said.
“And I feel like what we have going into 2025 is just that.
“I definitely feel like the strength of slate has never been better.”
PRICE BUMP APPROACHING
The price increases will hit customers in the next billing cycle, and comes after the last price increase in October 2023.
It also is the first time the company has ever increased the ad-supported plan, which launched the year prior.
Backlash over the increased prices is already pouring in from longtime customers.
“We all need to unsubscribe to teach them a lesson,” a fuming subscriber wrote in a post on X.
“Netflix has lost the plot. $25 a month is embarrassing,” another remarked.
RECORD SUBSCRIBERS
While the update may turn away some, Netflix still recorded just under 19 million new subscribers over the most recent fiscal quarter.
That means it now has a global membership count of around 300 million.
Netflix executives added that most of the subscriber increase could be attributed to the boxing match between Jake Paul and Mike Tyson that it streamed and the second season of the popular show, Squid Game.
Competitors like Paramount Plus also increased prices this past summer.
Peacock also quietly hiked costs in July, with some customers left saying they were “cutting off” the service for good.
