Netflix is continuously winning the Streaming War amid tight competition against other services, like Amazon Prime Video, Hulu, Disney+, and Paramount. As the streaming giant is still expected to lead the market this year, analysts assumed it might increase its prices again after raising its rates in October 2023.
Analysts from UBS, a global firm that provides financial services, predicted Netflix would raise the prices of its streaming plans this year to help accelerate its revenue and earnings growth as it continues to “take a bigger bite out of overall TV viewing.” Should this happen, its total revenue may grow to 15% in 2024, over twofold its 7% growth in 2023.
“We expect to see rate increases this year,” UBS analysts led by John Hodulik wrote in a research note, as reported by Variety.
Though Netflix has yet to announce the specific plans that will see the price hike, the company’s executives said the rate increases are already part of the plan. During its Q4 2023 earnings call, co-CEO Greg Peters revealed that they put the price increases on hold while rolling out the paid-sharing program.
At the time, they saw it as a substitute for price increases. But as they were already done with that, they would resume their standard approach toward the price rise. Despite the complaints, Peters said the price hike went more than anticipated.
We will continue to monitor other countries and try and assess… when we’ve delivered enough additional entertainment value to ask [customers] to pay a bit more to keep that positive flywheel going, and we can invest in more great films, series, and games for those members. So, you know, the summary statement might be, ‘Back to business as usual.’
How does Netflix dominate TV viewing?
According to Nielsen data, Netflix’s TV viewing rose to 7.9% in January 2024, a slight increase compared to 7.7% in December 2023. After successfully implementing the paid sharing program, it also had 29.5 million new subscribers in 2023, a huge jump from its usual annual average of 21 million in 2020-2022. And despite the continued price hikes, UBS claimed that its current plan rates are lower than its rivals per hour.
The firm estimates that its hourly rate is about 30 cents on ad-free tiers compared to Hulu’s 56 cents, Peacock’s 58 cents, Disney+’s 73 cents, and Max and Paramount+’s 81 cents. The analysts also revealed that the streamer is the “main beneficiary of structural changes in media,” as traditional media companies have shifted their focus on streaming amid the decline of their linear TV businesses.
“As the objective in streaming shifts from subscriber growth to profitability for the traditional media companies, we see Netflix as the ultimate beneficiary of this industry rationalization,” UBS analysts continued.
Despite the price increases, Netflix’s success in the field proves that users will continuously patronize its service. We may be hearing some complaints, but this may still be tolerated. So, with this high price hike, we expect to get good content from the streamer continuously.
