Netflix has announced price increases for some of its subscriptions. In Germany, the cheapest ad-free subscription is no longer available. The crackdown on password sharing brings the group a record number of new customers.
The crackdown on credential sharing and the cheaper subscription with ads have brought many new customers to Netflix. In view of the large increase in users, the video streaming giant now apparently feels encouraged in its strategy of implementing price increases.
The cheapest ad-free subscription will initially become more expensive for customers in the USA, France and Great Britain. In the USA, the most expensive Netflix subscription with the best picture quality will cost 22.99 dollars per month and in France 19.99 euros. In Germany you currently pay 17.99 euros for it.
Cheapest ad-free subscription to date for 7.99 euros
At the same time, starting next week in Germany, the cheapest ad-free subscription, which previously costs 7.99 euros per month, will no longer be available for new customers – but existing subscriptions will continue to run for the time being. The group is also planning something similar in Spain, Japan, Brazil, Mexico and Australia. This is just continuing what has already been implemented in the USA, Great Britain, Canada and Italy, Netflix said in a letter to shareholders. The deletion of the basic tariff increased the acceptance of other subscriptions there.
According to experts, Netflix wants to lure customers into advertising-financed offers with the changes to subscriptions and price increases. Because the advertising revenue per customer is higher than the monthly fees. Managers of the streaming service emphasized that this business area is still in its early stages. With its advertising offering, Netflix is increasingly targeting the advertising money that previously flowed into linear television. The service currently charges 4.99 euros per month in Germany for its standard subscription with advertising.
The strategy seems to be paying off for the streaming provider. Overall, the number of customers with advertising subscriptions increased by 70 percent within three months, it said. The subscription with advertising is going well because many users who previously watched Netflix with passwords from friends or family members opted for it, emphasized industry analyst Rich Greenfield.
Almost nine million new users
This is also reflected in the subscriber numbers: the number of subscribers rose by 8.76 million in the last quarter, almost quadrupling. The increase in new customers significantly exceeded its own expectations: Netflix itself had only expected an increase of six million users. Netflix now had 247.15 million paying customers at the end of the quarter.
Since the summer, Netflix has been taking action in Germany, among other places, against users sharing an account across one household. If more than one household uses a Netflix account, this costs additional money – either the other users pay for their own account, or the previous account holder adds them as an additional member.
Netflix sales increased by eight percent year-on-year to $8.54 billion, Netflix announced. Profits grew by around a fifth to around $1.68 billion. This was good news for shareholders: the share price rose by a good 13 percent in the premarket today.
Costs for streaming providers are rising
Streaming customers expect prices to continue rising in the coming months. After the agreement between the screenwriters’ union and the major studios and streaming providers in the USA, which ended a month-long strike, the authors should have a greater share of the streaming proceeds in the future.
Sooner or later, Netflix users will also feel the effects of the higher costs – after all, the US company currently dominates the streaming business.