Netflix hikes prices as its lead widens over other streaming services

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Netflix has raised its prices following a year that saw a record 41 million new subscribers join the platform.

On Tuesday, the world's biggest streaming service announced price hikes for most plans in the United States, Canada, and countries including Portugal and Argentina. In the U.S., the price of its ad-supported plan rose from $6.99 to $7.99 per month, while the cost of a basic subscription increased from $15.49 to $17.99. The platform's premium ad-free plan, which lets four users stream at the same time, went up by $2, to $24.99 per month.

Additionally, Netflix announced its annual operating income exceeded $10 billion for the first time ever, due in part to a 16 percent year-over-year increase in revenue.

Wall Street reacted positively to the news, with the company's stock price increasing roughly 12 percent by mid-morning Wednesday.

All quotes remain intact

Netflix's huge size enables it to purchase more expensive content, which puts other services at a competitive disadvantage, according to Evercore ISI analyst Mark Mahaney.

"To raise prices for all of their plans, Netflix would need to be extremely confident that it won't prompt a negative reaction from their customers," he said.

Netflix increased prices in its other international markets over the past few quarters without any issues, said co-chief executive Greg Peters. "Those changes have gone smoothly," Peters said. "We expect the same outcome for these recent changes."

According to Peters, the $7.99 monthly ad-supported plan is "a highly accessible entry point." Some of the largest streaming services, like Netflix, charge more for their cheapest monthly plans, such as $8.99 for Amazon's Prime Video and $9.99 for Disney Plus and Max. Additionally, Paramount Plus has an ad-supported option available at $7.99 monthly

Disney Plus, Paramount Plus, and Max sometimes give discounts to new or returning users, particularly during holiday shopping periods, while Netflix only rarely offers discounts. On the other hand, both their services, including Netflix, are sometimes offered together in a package deal.

Don't expect Netflix's price increase to lead its competitors to follow suit, Wedbush Securities Managing Director Dan Ives said. Instead, other streaming services will likely keep their prices unchanged and aim to take market share, he said.

“Netflix is looking down at competitors from the top of the mountain,” Ives said in an email.

The first decline in subscribers in 10 years occurred in 2022.

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The company is a widely recognized leader in streaming video, with 302 million paid subscribers.

For comparison, at the end of September, the most recent period for which data is publicly available, Disney reported 123 million global subscribers for its core Disney Plus service. Additionally, 35 million people subscribe to Disney Plus Hotstar, a joint venture in India. Disney also owns Hulu, which has 51 million paid subscribers.

Amazon announced that Amazon Prime has more than 200 million monthly visitors. (Amazon's founder, Jeff Bezos, also owns The Washington Post.) Warner Brothers Discovery reported in its latest quarterly financial report that it had over 110 million subscribers across its services, such as Max and Discovery Plus.