Netflix price hike: Top executives offer US outlook during Q3 earnings call

After reporting a solid third-quarter earnings, Netflix execs raised the question at the top of most investors' minds (though certainly not for inflation-stricken consumers): When will they raise prices in the US?

“Our approach to pricing has been remarkably consistent over many, many years,” said co-CEO Greg Peters. Based on that, through metrics like engagement, acquisition and retention, are we doing a good job there? So that we can take it forward and continue the whole process.”

Netflix has raised prices on various plans in the US and Canada half a dozen times since 2015, most recently in 2023. As the streaming field has become more crowded, upstarts have also raised their prices, especially for ad-free and standalone services. Apple TV+, which launched in November 2019 at $5.99 a month, has nearly doubled to $9.99. “Stream-flation” has also hit at a time when the price of consumer goods such as groceries has risen by 30% over the past two years, even though inflation has slowed significantly recently.

Peters, speaking during a video call focused on quarterly results, did not offer a specific timeline for the U.S. In a recent format change, Netflix made the video earnings call a live event and scrapped the previous setup, where an analyst would moderate the call. And pepper execs with questions. Spencer Wang, vice president, finance, IR and corporate development, now leads quarterly conversations, citing analysts who have submitted questions and then reading the questions aloud.

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On the subject of pricing, Wang said the question came from Rich Greenfield of Lightshade Partners, one of three references to him during the call. Greenfield in particular was curious, according to Wang, as to why the company wouldn't look to raise prices in the near term given the strength of its content slate heading into late 2024 and into 2025.

When other executives laughed at the pricing issue, Peters joined in the laughter and joked that “we're going to invite Rich to join our pricing committee.” CFO Spence Newman later joked that he was “quiet” for a long time because he was busy “getting off the pricing committee” to make room for Greenfield.

A different analyst asked about the gap between the $6.99 Basic with Ads tier and the most popular level of service, Standard, which went to $15.49 in 2022. Peters said the cheapest plan “represents an incredible value,” and the company wants to continue offering a “spread” of different plans. “Every plan has to earn its place on the roster,” the co-CEO said. “It must provide sufficient value to consumers” that it “does not add complexity” and does not cause consumer confusion.

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Outside of the U.S., Peters acknowledged, there are “a few countries” where the company has recently raised rates. Often companies test price changes to gauge consumer reaction before rolling them out more broadly, the executive noted.

In its quarterly letter to financial aid shareholders, Netflix said it recently raised prices in the EMEA region as well as parts of Japan. From tomorrow, it added, prices are rising in Spain and Italy.