A price rise in its ad-free options will nudge more subscribers to the standard plan with ads where commercials rake in more revenue per user.
Netflix’s crackdown on password-sharing potentially boosted its subscriber numbers by about six million in Q3 2024 and may have set the stage for a potential price increase.
Instead of hiking ad-free prices like rival streamers, the OTT platform curbed password-sharing outside households to tap the more than 100 million viewers who use its service without subscribing. So far, most viewers subscribing to Netflix after the password crackdown have opted for the ad-free plans, media analysts said. Its standard plan with ads costs $6.99 a month, while the ad-free plans start at $15.49.After a slow start for the ad plan launched last year, analysts expect Netflix will raise prices of its ad-free options in the coming months to nudge more subscribers to the other tier, where commercials help bring in more revenue per user.
According to Insider Intelligence analyst Ross Benes: “Using these tactics, Netflix will likely double its ad-supported viewership next year.” He expects Netflix to show more ads to users over time, catching up with rivals.
The ad tier is expected to bring in some $188.1 million in revenue in the third quarter ended September, with subscriber additions of 2.8 million, according to Visible Alpha estimates.
Overall, Wall Street expects the streamer to post its strongest quarterly subscriber additions this year, according to LSEG data. Revenue in the third quarter likely rose 7.7% to $8.54 billion, the fastest growth in five quarters, thanks to strong programming.
