Netflix Plans to Raise Ad-Free Subscription Costs: Users React

Quincy Jon, Tech Times 11 October 2023, 04:10 pm

(Photo: CHRIS DELMAS/AFP via Getty Images) In this illustration photo taken on July 19, 2022, the Netflix logo is seen on a TV remote in Los Angeles.

Netflix plans to raise its ad-free subscription rate, per reports. The streaming giant will likely increase its fees when the Hollywood actors' strike ends, marking the first price hike since January 2022.

Although the precise amount of the price rise is still unknown, it is anticipated to first impact the US and Canada before spreading to other countries, like with prior pricing increases. Netflix CFO Spence Neumann told investors in July that major regions like the US will not see pricing rises for at least a year, according to What Hi-Fi.

Consumers are struggling with the surging costs of various streaming services, which has put pressure on the streaming business, which has witnessed consistent streaming service price hikes in recent years. This is known as "streamflation." Within the previous 18 months, platforms including Netflix, Disney+, Discovery+, Apple TV+, and Amazon Prime (including Prime Video) have all increased their membership costs.

Additionally, streaming services are looking for innovative ways to make money, such as implementing ad-supported tiers and forbidding password sharing—a strategy that Netflix first popularized and that rivals like Disney+ have now adopted.

Users' Reaction on Upcoming Netflix Subscription Price Increase

Concerns are raised regarding the potential effects of the impending Netflix subscription price increase on the platform's millions of subscribers. Recent research conducted by CivicScience shows that 29% of current or future Netflix customers would choose an ad-free plan, such as Netflix Standard or Premium, by starting or continuing their membership. However, 39% of respondents stated that they would end their membership if a price rise became effective.

An analysis of the data shows that individuals who pay $15.49 per month for ad-free services are likely to keep doing so if the price rises. A small percentage would upgrade to the more current $6.99/month Netflix Standard plan with advertising, but more than one-third would consider canceling their subscription.

Read Also: Israel-Hamas War: How Hamas Used Commercial Drones in Recent Terror Attack

It is projected that customers who consume Netflix content frequently will be most affected by a subscription price hike. If there is a price increase, ad-free subscriptions are expected to decline significantly for these consumers. Particularly, monthly subscribers are anticipated to migrate to the ad-based plan and are the most likely to think about stopping their membership.

Consumers Feel the Impact of 'Streamflation'

Streamflation has hurt customers' finances and confidence, reducing their usage of streaming services. Data from CivicScience shows that 33% of US consumers have already cut back on their streaming subscription expenditures or intend to do so, up from 28% in January. Additionally, the number of people with four or more streaming subscriptions has been declining month over month, following a trend seen all year.

The upcoming Netflix subscription price increase occurs as Hollywood's operations get back up after the Writers Guild of America (WGA) strike. Initiating voting on a new contract with major Hollywood companies, including Netflix, the WGA just called off its strike.

According to The Verge, the WGA will have access to streaming data from streaming providers as part of the new deal, giving authors information on how well their material is performing. The deal sets an 18% minimum raise in pay for high-budget films and 26% residuals for streaming feature writers. The WGA calculates that the new deal will only cost Netflix 0.2% of its yearly income.