![]() The “Standard” plan was cut to $6.60 from $8.55. Just last month Netflix slashed prices in one huge market where it has relatively low penetration, India, lowering the price of the “Basic” plan from $6.60 to $2.60, and its mobile-only plan to under $2. The new price hikes will only drive that figure higher.Īt the same time, the company is investing in lower-cost offerings in Latin America (where its ARPU was $7.86 per user last quarter) and parts of the Asia-Pacific region (where it was $9.60). With the latest moves, Netflix appears to be reorienting its U.S.-Canada market around maximizing ARPU (average revenue per user), the gold standard of subscription revenue metrics (Netflix refers to it as average revenue per membership).Īccording to the company’s last quarterly financial report, North America already had the highest ARPU in the world at $14.68, up from $13.40 a year earlier. That value-driven positioning allows the company to structure its pricing from a global perspective, offering cheaper plans in markets where it needs scale, while raising prices in mature markets to drive cash flow. 16 report, saying: “We view this price hike as coming from a position of strength, likely supported by strong engagement and viewership in the fourth quarter.”īut given increased streaming competition from companies like Disney, WarnerMedia and ViacomCBS, some investors worry that Netflix has less “pricing power,” meaning that it can’t push up the monthly service cost without losing some subscribers through ever-volatile churn.Ĭredit Suisse’s Douglas Mitchelson commented on price hikes even before they were announced, pointing out investor “concerns that Netflix will have a harder time raising prices when there is more competition in the marketplace.” But he also highlighted a counterpoint, arguing that “Netflix’s usage would suggest the service is a very cheap entertainment option, even for international households.” “We think Netflix tends to raise prices when churn is low, and this could stimulate more bullish views around fourth quarter 20 net adds,” he wrote.Įvercore ISI analyst Mark Mahaney echoed that in a Jan. 18 highlighted that management’s decision to raise prices could be a positive sign for recent subscriber trends. How 'Rustin' and Native Son Teamed to Reclaim the Civil Rights Activist's History as a Rallying CallĬahall on Jan. When Netflix last raised prices in late 2020, its subscriber count only continued to grow (the global pandemic likely helped). The argument in favor of higher prices is that they underline the breadth of programming and value of the service, while boosting cash that can go into financing or acquiring content. 14 - basic plans will be $9.99 and the next tier will be $15.49 - the immediate reaction from the market was positive: Its stock price jolted upward. So when the streaming giant raised prices on its plans in North America by $1-$2 on Jan. When Netflix raises the price of its streaming packages, Wall Street takes notice.
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