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Netflix is just the latest streaming service to get more expensive.
The streaming giant is raising prices for ad-free viewing in the US, as well as in France and the UK, it announced this week. Netflix’s basic ad-free tier will now cost subscribers $11.99 a month, up $2, and its most expensive premium tier will cost subscribers $22.99 a month, up $3. Netflix’s ad-supported tier will remain priced the same, at $6.99 a month.
The price hike comes after a strong quarter for the company in which Netflix added nearly 8.8 million new subscribers, substantially more than analysts expected. Revenue in the quarter was up nearly 8% year over year. It also comes after Netflix reported strength in its password crackdown, which included a paid sharing rollout requiring subscribers using accounts outside of one household to pay more. That strategy, Netflix said in a letter to shareholders, helped boost revenue and net subscriber additions.
“With our continued plan evolution, pricing sophistication, and all that hard work growing our ads business, we’ll keep getting better at monetizing that big [addressable market] and growing reach and engagement,” Netflix CFO Spence Neumann said in an earnings call.
Join the club: Netflix joins other streaming services in raising prices to boost revenue and drive subscribers to less expensive ad-supported streaming. Disney+, Discovery+, Max, Hulu, Paramount, and Peacock have all raised prices this year, with at least some of them expressly designed to migrate more subscribers to ad tiers.
Speaking of ads…While the streamer didn’t share the size of its ad-supported viewership, it highlighted a few stats about the segment. On average, 30% of new sign-ups in countries with advertising tiers are on Netflix’s ads plan, the company disclosed, and ads plan membership is up almost 70% from the previous quarter.
Amid that growth, Netflix is debuting more tools for advertisers. During Advertising Week, Peter Naylor, the company’s VP of global advertising sales, announced single-title sponsorships on the platform, where brands can appear as the premier sponsor for a show or season. One brand has already signed up: Frito-Lays Smartfood brand is sponsoring Love is Blind, Naylor said.
Later this year, Netflix will roll out binge ads, a now-commonplace streaming format where brands can sponsor periods of ad-free viewing for viewers, Naylor said. And as the streamer pushes into live sports, which it will with the Netflix Cup golf tournament, it’s offering sponsorship opportunities to advertisers; T-Mobile and Nespresso are already on board. (Elsewhere, Netflix is also pushing into live experiences and shopping, with permanent storefronts planned for 2025.)
The elephant in the room: The ongoing actors’ strike, negotiations for which came to a halt last week, remains a major obstacle to continued production of programming for Netflix and other streamers. During the earnings call, co-CEO Ted Sarandos acknowledged that disagreements “broke our momentum,” but reiterated the company’s commitment to reaching a deal.
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