Whether Netflix plans to raise prices of its streaming subscriptions in the future has been raised yet again as its soon-to-be-released third-quarter results approach.
Netflix subscribers in the U.S. have to pay a monthly fee of $6.99 for its ad-supported plan, while the Standard and Premium tiers are $15.49 and $22.99 per month. Both of those plans are ad-free.
The streaming giant’s most-recent hike occurred in the fall of last year, when U.S. subscribers saw the prices of the since-discontinued Basic plan and the Premium tier go up. The cost of those Netflix subscriptions also increased in the U.K. and France at the same time.
Oppenheimer & Co. said in an Oct. 9 research note that it anticipates "a Premium pricing increase for other regions, and more importantly an 8%-15% increase to the Standard plan."
The firm’s Jason Helfstein said the price of the Standard plan has been flat since January 2022, when Netflix upped it in the U.S. by $1.50.
"In Jan. 2022, NFLX Standard Plan priced at 53% premium to peers, this is now 4%. Meanwhile, plans is 18%/9%/3% cheaper than Hulu/Max/Disney+ in the US," he said in the note. "Furthermore, a 15% increase represents a 23% discount to Premium plan, in line with the historical average."
"Strong 3Q viewing and 4Q content slate, including NFL, should further reduce churn risk," Helfstein also said.
Oppenheimer, factoring in the potential hike, raised its fourth-quarter and fiscal 2025 average revenue per member estimates by 2%.
Macquarie US Equity Research senior media tech analyst Tim Nollen on Friday upped his target price for Netflix, saying in a research note he were "confident on its ad tier in the long-term, boosted by sports and potential price increases." The note offered insights about media tech companies ahead of third-quarter earnings.
The analyst suggested a potential hike could be in the pipeline for American subscribers.
NETFLIX SELECTS CBS SPORTS TO HANDLE PRODUCTION FOR SLATE OF CHRISTMAS DAY NFL GAMES
"We think Netflix boasts strong pricing power given it has not raised price on the standard tier since Jan ‘22 - Hulu and Max are now both more expensive than Netflix standard," Macquarie’s research note said. "Netflix can also mitigate against churn as it boasts the lowest-priced video streaming service at $6.99 with ads, illustrating its strong price to value arc."
FOX Business reached out to Netflix for comment.
Netflix executives have told analysts and investors that it looks at signals like member acquisition, engagement and retention when determining when to raise its subscription fees.
Earlier this year, Co-CEO Gregory Peters said Netflix saw its password-sharing crackdown as a "substitute price increase" and did not raise subscription prices during that initiative’s rollout.
Netflix started limiting the sharing of Netflix accounts to those "living together in one household" in earnest last year, making those outside a household either get their own separate membership or become an "extra member" on the account they were using.
NETFLIX WANTS YOU TO BINGE GAMES
The "extra members" cost extra – $7.99 per month in the U.S. – and have given the streaming giant a subscriber and revenue boost.
"We offer several different price points so that consumers can select a plan that best fits their circumstances and needs," the company says on its website. "Additionally, we periodically adjust pricing as this allows us to invest in the service to better serve our members. We also test different approaches to pricing (including different plans and price points) to better understand consumer demand."
Netflix and its platform of content is available in over 190 countries around the world.
