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Netflix prepares investors and users for further price hikes in 2024

The Netflix logo displayed on a phone screen and its website on a laptop screen are seen in this photo taken in Krakow, Poland on June 8, 2023.

Jakub Porzycki | Nuphoto | Getty Images

Prepare to pay more money for Netflix.

You had to read to page six of the letter to Netflix shareholders to find it. But it was there. A dreaded phrase for price-conscious consumers. A big congratulations to the investors.

“As we invest in and improve Netflix, we will occasionally ask our members to pay a small fee to reflect these improvements, which in turn helps generate a positive buffer of additional investment to improve and further develop our service,” the company told investors. .

Netflix launched its advertising tier in November 2022 by cracking down on password sharing to give users a cheaper way to access content from the world’s largest streamer. So far, few people have registered. Netflix announced earlier this month that it had 23 million monthly active users on its advertising tier. That could represent 12 to 15 million paying subscribers, estimates Evercore ISI analyst Mark Mahaney.

Netflix has more than 260 million subscribers worldwide after adding 13.1 million in the fourth quarter – the company’s largest addition ever in the fourth quarter.

Perhaps what Netflix executives need to remember is that most of its audience is happy to pay what Netflix charges. In the United States, a standard Netflix subscription currently costs $15.49 per month. The ad tier costs $6.99 per month – the same price it launched at in 2022.

Tuesday, Netflix announced that WWE Raw would go live in 2025. This is Netflix’s biggest foray into live entertainment to date. Netflix is ​​paying over $5 billion for 10 years of Raw.

With more content, Netflix could have leverage to convince its users that they should pay more. The company said it plans to increase its contents depreciation by a “high single-digit percentage year over year,” according to its letter to shareholders.

Disney plans to launch a direct-to-consumer ESPN later this year or in 2025. That product will likely cost significantly more than Netflix. It will also give the company cover to raise prices, as consumers may view Netflix as an even better value proposition compared to competing streamers.

Netflix did not announce a price increase in its quarterly letter or say when it would arrive.

But rest assured: it happens.

WATCH: Strong subscriber growth leads to another strong quarter for Netflix

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