Netflix set to raise prices again in 2024, analysts say

Analysis suggests further price increase could follow last October’s hike

Netflix is expected to raise prices once again this year, according to analysis by investment bank UBS Securities.

The streaming giant increased the cost of its service last October. In the UK, that meant the basic, ad-free subscription rose from £6.99 a month to £7.99, while the premium subscription rose from £15.99 to £17.99.

Now, UBS analysts led by John Hodulik have predicted in a report that further price rises will follow.

“We expect to see rate increases this year,” wrote Hodulik in a research note published today, 27 February.

The analysts estimate that this extra revenue, along with income from the ad-supported tier and healthy subscriber gains should mean the company’s total revenue growth will increase by 15 per cent in 2024, compared to 7 per cent last year.

While Netflix hasn’t announced any plans to raise subscription prices this year, execs have said that rate increases are on the table.

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Last year’s rises came as the US firm announced it had added 8.8 million subscribers between July and September – more than expected – partly driven by its scheme to crack down on password sharing.

It introduced an extra fee to enable more than one household to share the same account, which the company said accounted for around 30% of the new sign-ups in countries where it was available.

Netflix said many users appeared to be choosing this option rather than quitting the service.

Netflix co-CEO Greg Peters noted last year that they had held off raising prices before cracking down on password sharing.

“Now that we’re through that, we’re able to resume our sort of standard approach toward price increases,” said Peters. “And price increases, you’ve seen us do that in the US, UK and France. Those changes went well better than we forecasted.”

Elsewhere in the UBS research note, analysts pointed out Nielsen data which shows Netflix’s share of US television viewing rose to 7.9% in January 2024, up from 7.7% the previous month.

They argue that Netflix has been the “main beneficiary of structural changes in media.”

As traditional television businesses have declined, media companies have shifted their focus to achieving profitability in streaming.

“The new playbook includes 1) price increases, 2) platform consolidation, 3) library curation (with attendant asset write-downs), 4) cuts to content spending (adjusting for strike-related declines in 2023) and 5) a renewed focus on content licensing,” wrote the UBS analysts. “As the objective in streaming shifts from subscriber growth to profitability for the traditional media companies, we see Netflix as the ultimate beneficiary of this industry rationalization.”