Netflix Has Hiked Prices Again But Leadership Promises Better Shows and New Products

Netflix executives discussed their plans to rev up content and ad spending.

Netflix Co-Ceo Ted Sarandos, Netflix Film Chairman Scott Stuber, and Netflix Co-Ceo Greg Peters
(L-R) Netflix Co-CEO Ted Sarandos, Netflix Film Chairman Scott Stuber, and Netflix Co-CEO Greg Peters attend the Netflix Oscar Nominee Celebration at Sunset Tower Hotel on March 11, 2023 in Los Angeles, California. Emma McIntyre/Getty Images for Netflix

Following its third-quarter earnings release yesterday (Oct. 18), Netflix (NFLX) increased the prices on two streaming packages by as much as 20 percent in the U.S., the U.K. and France. The basic plan now costs $11.99 per month and the premium, ad-free plan is $22.99 after the hikes. The price increase is an approach to boosting revenue, which co-CEO Greg Peters said Netflix would “wisely invest” in new products. He and co-CEO Ted Sarandos laid out the vision for spending $4 billion more on content in 2024. Some plans for that investment are in gaming, live sports, and original and licensed content. 

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Netflix reported $8.5 billion in revenue and a profit of $1.7 billion for the third quarter. In a letter to shareholders, the company credited much of its annual revenue, an 8 percent increase, to membership growth. The streamer added 8.8 million new paid members in the July-September period, compared to just 2.4 million in the same period last year. 

Peters answered questions about the company’s password-sharing crackdown during the earnings call with investors. The practice seemed effective in the previous quarter, as sign-ups exceeded cancellations and 5.9 million new paid members came on. Peters said the company will continue “interventions” over the next few quarters, and the efforts to turn account borrowers into paid members will focus on enticing them with product improvements. 

We want to show up with the right product experience at the right moment. That’s more likely to convert a borrower over rather than have them spin off,” Peters told analysts. 

To improve that experience, company executives discussed their plans to rev up content spending. Netflix forecasts it will spend $17 billion on content in 2024, up from $13 billion in 2023. The costs include new features like “Netflix Cup,” Netflix’s first live-streamed sports event, and gaming products that are supposed to accompany shows and movies.

Co-CEO Ted Sarandos argued that Netflix spends its money well, citing the success of the live-action version of the Japanese manga One Piece, which earned number-one spots in 84 countries. Sarandos also said that the company will continue licensing third-party content as it has done with shows like USA Network’s Suits and HBO’s Insecure and Ballers

These ventures are a significant part of Netflix’s strategy to meet its margin targets, which many investors saw as too lofty. According to the shareholder letter, another growth plan is to improve the platform’s ad experience for the standard plan to attract more consumers to that tier. 

“There’s no change in our financial objectives and also no change in our long-term margin expectations,” CFO Spencer Neumann said on the earnings call. “We don’t think we’re anywhere near a margin ceiling.”

Netflix Has Hiked Prices Again But Leadership Promises Better Shows and New Products