After delivering a solid third-quarter earnings report , Netflix execs fielded the question top of mind for most investors (though definitely not for inflation-wracked subscribers): When will they raise prices in the U.S.?
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“Our approach to pricing has been remarkably consistent over many, many years,” Co-CEO Greg Peters said. “Our core theory is, we’ve got to work really, really hard to make sure we are delivering more value to members every quarter. Then, we assess based on how that’s going, through metrics like engagement, acquisition and retention, did we do a good job there? How we actually deliver that promise of more value. If we do, then we occasionally ask members to pay a bit more, so we can invest that forward and keep that whole process going.”
Netflix has raised prices of various plans half a dozen times in the U.S. and Canada since 2015, most recently in 2023. As the streaming field has grown crowded, upstarts have also stepped up their prices, especially for ad-free and stand-alone services. Apple TV+, which launched at $5.99 a month in November 2019, has nearly doubled to $9.99. “Stream-flation” has also hit at a time when the cost of consumer goods like groceries has gone up 30% over the past two years, though the rate of inflation has recently decreased significantly.
Peters, speaking during a video call focused on the quarterly results, didn’t offer any specific timeline for the U.S. In a recent format shift, Netflix made the video earnings call a live event and ditched the previous setup, in which an analyst would moderate the call and pepper execs with questions. Spencer Wang, Vice President, Finance, IR and Corporate Development, now leads the quarterly conversation, citing analysts who have submitted questions and then reading the questions aloud.
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In teeing up the topic of pricing, Wang said the query came from Rich Greenfield at Lightshed Partners, one of three references to him during the call. Greenfield in particular was curious, according to Wang, why the company wouldn’t look to boost prices in the very near term, given the strength of its content slate at the end of 2024 and heading into 2025.
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As other execs chuckled at the topic of pricing being raised, Peters joined in the laughter and joked that “We’re going to invite Rich to join our pricing committee.” CFO Spence Neumann later quipped he had “quiet” for a stretch of the call because he was busy “getting off the pricing committee” to make room for Greenfield.
A different analyst asked about the gap between the $6.99 Basic With Ads tier and the most popular level of service, Standard, which went to $15.49 in 2022. The cheaper plan “represents an incredible value,” Peters said, and the company intends to continue offering a “spread” of various plans. “Every plan has to earn its spot on the roster,” the Co-CEO said. “It has to deliver enough value to consumers” that it doesn’t “add to the complexity” and induce consumer confusion.
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Beyond the U.S., Peters acknowledged, there are “a couple of countries” where the company has recently upped rates. Often the company tests out price changes to gauge consumer reaction before rolling them out more broadly, the exec noted.
In its quarterly letter to shareholders accompanying the financials, Netflix said it recently raised prices in parts of the EMEA region as well as Japan. Starting tomorrow, it added, prices are going up in Spain and Italy.
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