Netflix is raising prices in some countries as the surge in growth from its crackdown on password sharing begins to slow. The company informed investors that it is working to improve revenue by adjusting its pricing and plans. Over the past month, Netflix has already increased prices in Japan and parts of Europe, the Middle East, and Africa, with hikes in Italy and Spain starting this week.
This news came as Netflix reported adding 5.1 million new subscribers in the three months ending in September—the smallest increase in over a year. With such a vast global subscriber base, Netflix faces challenges in finding new customers, putting pressure on the company to show investors how it will continue growing in the future.
In 2022, Netflix responded to signs of slowing growth by cracking down on password sharing and introducing a cheaper, ad-supported streaming option. This led to a significant rise in subscribers, with more than 45 million new members joining since the crackdown began. Today, Netflix has over 282 million subscribers globally.
Although advertising is expected to be a major future revenue source for Netflix, the company said it is still in the early stages and doesn’t expect it to drive significant growth until next year. Currently, Netflix’s ad-supported plan, its most affordable option, made up 50% of new sign-ups in regions where it’s available last quarter.
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Despite limited help from advertising, Netflix reported strong financial results for the July-September period, with a 15% revenue increase to $9.8 billion, and profits exceeding $2.3 billion. Shares rose 4% in after-hours trading, as subscriber growth surpassed expectations.
Netflix last raised prices in the U.S. and U.K. in 2022 but left its standard ad-free plan unchanged. The company has a history of testing price changes in smaller markets before adjusting prices in major regions like the U.S. and U.K.
According to Matt Britzman, senior equity analyst at Hargreaves Lansdown, Netflix’s solid financial position allows it to keep investing in new content, which is crucial for raising prices without losing customers. He noted that consumers are quick to switch streaming services if they don’t feel they’re getting value, so fresh content—especially in areas like sports—will be key to Netflix maintaining its edge and justifying price increases.
