In the past, Netflix price hikes have led to a slowdown in subscriber growth, particularly in the more-mature U.S. market. But on a conference call with investors last week, Chief Operating Officer Greg Peters said the company believed it could raise prices, given the large amount of original and popular shows it produces.
“We feel like there is that opportunity to occasionally go back and then ask members, where we’ve delivered that extra value in those countries, to pay a little bit more,” Peters said.
Raising prices in a difficult economic environment isn’t without risks, which Netflix nodded to by keeping its service for budget-conscious subscribers unchanged. Spotify Technology SA, the largest audio streaming service, slid Thursday after reporting subscription-service revenue that missed estimates. That company cited price increases in certain international markets.
The increase in Netflix’s most-popular tier brings its price closer to, but still below, that of AT&T Inc.’s HBO Max, whose $15 monthly fee is thought to have discouraged sign-ups by people who didn’t already have HBO.
Netflix last week reported a second-quarter global subscriber number that fell short of analysts’ expectations. Chairman Reed Hastings said he wasn’t concerned about the shortfall, since the global pandemic had prompted more subscribers to sign up early in the year and viewing trends remained strong. The company has over 195 million subscribers worldwide.
Netflix most recently announced higher U.S. prices in January of last year, an increase at the time of $2 a month for the most-popular plan.
—Bloomberg News
