Another price hike is on the horizon
The Netflix of the Netflix Divide and Beyond: The Streamer’s Break on Password Sharing and the Loss of its Freeloader
Netflix’s financial performance also topped the analyst forecasts that shape investor expectations. The Los Gatos, California, company earned $1.68 billion, or $3.73 per share, a 20% increase from the same time last year while revenue climbed 8% to $8.54 billion.
Speaking of benefits: the Hollywood strikes. Even though the Writers Guild of America struck a deal with studios and script scribes are getting back to work, actors remain on strike, leaving many productions stalled. There is a surge in popularity on Love Is Blind and Suits since the beginning of the year, but they are not on the platform at the moment. But by choking the content pipeline, the actors’ strike could eventually leave the streamer with fewer offerings to lure or retain subscribers. According to The Wall Street Journal, there could be a price hike after the strike ends. It’s possible that the increases announced Wednesday are the price hikes the Journal predicted, but if the cost of Netflix goes up again, the company will have to offer customers more to demonstrate it provides the same value.
According to the video streaming service, summer subscriber gains that surpassed industry analysts’ projections is a sign that it’s converting former freeloaders into paying customers.
Consider the company’s crackdown on password sharing. The killjoy campaign began in the US and UK in May of 2023. It came on the heels of a topsy-turvy time for streaming, when Netflix was facing increased competition from new streamers like Disney+ and HBO Max (now known as Max) and losing subscribers for the first time in a decade. The move to quash password-sharing—which basically shut out users who didn’t appear to live in the same household as the account holder—also landed shortly after the streamer pushed its much-hyped $7-per-month ad-supported tier.
The company’s stock price soared more than 12% in extended trading after the latest quarterly numbers came out. Netflix shares have increased by about 30% so far this year amid mounting evidence its video streaming service is faring better than most in a crowded fielded of competitors that is testing the financial limits of many households.
Although it’s not clear how much Netflix will spend on original programming next year, the company said it will spend around $17 billion on TV and films.
Streamflation and Password Sharing: What Netflix can teach us about the 21st Century? Commentary on Anomalous Video Advertising
The apparent success of the password-sharing crackdown could now free management to focus on other ways to bring in more revenue, such as a low-priced option that includes advertising introduced a year ago.
Cheruvu thinks that the advertising potential of Netflix is not appreciated. “The audience engagement with the video advertising there could be multiple times stronger than a social media platform.”
“The ‘streamflation’ era is upon us, and consumers should expect to be hit with price hikes, password sharing limits, and enticed with ad supported options,” said Scott Purdy, U.S. media leader for KPMG.
