Netflix hikes prices in some countries as growth fades

Netflix is starting to raise prices in some countries, as growth spurred by its crackdown on password sharing starts to fade.

The company told investors on Thursday that it was “working to improve our monetization by refining our plans and pricing” and had already increased prices in Japan and parts of Europe, the Middle East and Africa over the last month.

In Italy and Spain, the hikes will start this week.

The update came as the streaming giant reported adding 5.1 million subscribers in over the three months that ended in September – the smallest number in more than a year.

Netflix is under pressure to show investors what will power growth in the years ahead, as its already massive reach makes finding new subscribers more difficult.

The last time the company saw signs of slowdown, in 2022, it launched a crackdown on password sharing and said it would offer a new streaming option with advertisements.

The crackdown unleashed a new wave of growth.

The company has added more than 45 million new members since its start last year. It now boasts more than 282 million subscribers around the world.

Analysts also expect advertisements to eventually become big business for Netflix.

For now, however, the company has said it remains “early days” and told investors not to expect it to start driving growth until next year, despite many subscribers opting for the ad-supported plan.

The plan, which is the company’s least expensive option, accounted for 50% of new sign-ups in the places where it is offered in the most recent quarter, Netflix said.

Even without a boost from advertising, Netflix said revenue in the July-September period was up 15% compared with the same period last year, to more than $9.8bn (£7.5bn). It also reported profit of more than $2.3bn.

Shares rose about 4% in after hours trade, as subscriber growth came in ahead of analyst expectations.

Netflix last raised prices in the UK and US last year, but those moves only affected certain plans. It has left the price of its popular “standard plan” without adverts untouched since 2022.

In the past, the company has sometimes experimented with pricing in smaller countries before making changes in major markets, such as the US and UK.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said Netflix’s strong financial position put the firm in a position to keep spending money to make new hits – the key if it hopes to raise prices without backlash.

“This is inherently a fickle market, with consumers happy to swap streamer if they don’t think they’re getting value,” he said.

“The addition of fresh content is key to that, especially in areas like sporting events, and could give Netflix the edge it needs to push prices higher and keep customers coming back for more.”