Netflix has raised its subscription prices in the US for the first time in nearly a year-and-a-half, further widening the price gap between the video streaming giant and music streaming leader Spotify.
Under its latest US pricing, Netflix is increasing the cost of its ad-free Standard plan, which allows for two simultaneous HD streams, by $2.50 per month, to $17.99 from $15.49.
The Premium tier, meanwhile, now costs $24.99, up $2 from $22.99.
As a result, subscribing to Netflix’s Standard tier will now cost you approximately $72 more per year than subscribing to Spotify’s individual Premium (at $11.99 per month).
Meanwhile, Netflix’s Premium tier, at that $24.99pm price point, costs more than double Spotify’s flagship individual tier, or $132 more per year.
Netflix’s latest price adjustment widens an already significant gap with Spotify, which raised its Premium subscription by $1 per month to $11.99 in June 2024.
Meanwhile, Netflix is also raising the price of its ad-supported tier, which now costs $7.99 per month, up from $6.99 previously.
A history of Spotify and Netflix’s US pricing (source: MBW)
Netflix announced its latest price hike on Tuesday (January 21) as it released its Q4 2024 results, revealing an 18.9-million increase in the number of paying subscribers in the quarter alone, more than tripling the 5.1-million increase in Q3 2024.
As a result, Netflix now boasts over 300 million paying subscribers – 301.63 million, to be precise.
Netflix attributed the price increase to its ongoing investment in programming and delivering “more value for our members.”
“We will occasionally ask our members to pay a little more so that we can re-invest to further improve Netflix.”
Netflix
“We will occasionally ask our members to pay a little more so that we can re-invest to further improve Netflix,” Netflix said in a letter to shareholders.
Aside from the US, Netflix is also adjusting prices in Canada, Portugal, and Argentina.
During an earnings call, Gregory K. Peters, Netflix’s Co-CEO, President & Director, said: “We look to continue to provide more value to our members, seeking to wisely invest to increase the variety and quality of our entertainment offering. And then we listen to those members.
“We listen for signals like engagement, retention, acquisition. There’s more secondary signals as well, all to tell us when we’ve achieved that increase in value. And when we’ve done that, then we ask them to pay a bit more to keep that virtuous cycle going.”
“We look to continue to provide more value to our members, seeking to wisely invest to increase the variety and quality of our entertainment offering.”
Gregory K. Peters, Netflix
Peters told analysts during the company’s earnings call that Netflix’s ad-supported tier continues to prove popular among subscribers.
“We love our ads plan because it allows us to offer a lower price point for consumers. That’s more choice, good accessibility… It means that we obviously have more people that can sign up and enjoy a growing range of entertainment that we’ve got to offer.”
Netflix noted that its ads plan accounted for over 55% of sign-ups, with memberships in this tier growing nearly 30% quarter over quarter. As a result, the platform is offering a new tier called Extra Member with Ads, in 10 of the 12 markets where it offers an ad-supported tier. The new plan allows Netflix subscribers with a Standard or Premium plan to add a household to their plan, at a price point that is $1 less per month than the Standard with Ads plan.
In Q4, Netflix’s revenue jumped 16% YoY (or 19% excluding the impact of foreign exchange rate movements) to $10.25 billion from $8.83 billion in Q4 2023. Net income climbed to $1.87 billion from $938 million.
Following the price hikes, Netflix expects to record an 11.2% YoY jump in revenue to $10.42 billion. For the full year, revenue is expected to range between $43.5 billion and $44.5 billion, up by about $500 million from the company’s previous guidance.
“In Q1’25, we expect revenue growth of 11% (14% F/X neutral), which is modestly below our full year guidance due to the timing of price changes and the seasonality of our ads business,” Netflix said.
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