an imminent price increase for subscribers?

As Netflix will release its financial results for the third quarter of 2024 on October 17, speculation is rife about a potential price increase. Subscription growth, which recently benefited from measures against account sharing, appears to be slowing, leading experts to suggest price increases to maintain revenues.

Netflix prices could soon rise, according to several Wall Street analysts. As the streaming platform prepares to publish its third quarter 2024 results, some observers believe that Netflix may need to adjust its prix. The objective: to maintain its growth trajectory, particularly after the gains linked to the crackdown on password sharing have run out of steam.

Price increases planned by Netflix?

Netflix, whose results for the third quarter of 2024 are expected, could soon revise its prices upwards. The last significant increase took place in October 2023, but only concerned the Premium (€19.99) and Standard (€13.49) offers. Analysts now expect a more widespread rise, as Dan Salmon of New Street Research pointed out in an October 15 note: “There is potential for a major price hike announcement, including in the United States”.

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Netflix’s strategy would consist of compensating for the stagnation of average revenue per user (“ARM”) due to fluctuations in exchange rates and the diversity of offers depending on the country. With competitors like Hulu and Max offering more expensive ad-free subscriptions than Netflix, the company appears to have room to increase its prices, particularly on its Standard plan, which has not seen an increase since January 2022. According to Tim Nollen and Ross Compton of Macquarie Equity Research “Netflix benefits from strong pricing power, having kept the price of the Standard package stable for two years”.

A strategy to support long-term growth

Netflix faces several challenges to maintain its growth. The program to combat account sharing, in place for more than a year, has led to a notable increase in subscriptions, but this effect is gradually attenuating. Despite this, some experts, such as Alicia Reese of Wedbush Securities, believe that the platform will continue to benefit from this measure. She specifies that the adoption of the package with advertising also helps to limit the user churn rate.

In terms of financial results, analysts forecast revenue of $9.77 billion for the third quarter, an increase of 14% compared to the previous year. Earnings per share, meanwhile, are expected to reach $5.11, surpassing the $3.73 recorded a year earlier.

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As Netflix prepares to stop publishing its subscriber figures from 2025, the platform will place more emphasis on indicators such as engagement and profitability to illustrate its performance. However, this decision raises questions among certain investors, who still consider the evolution of the number of subscribers as a good indicator.