Netflix plans to raise prices after actors strike ends

The US giant will join a growing list of streaming players to lift fees as Disney weighs launching a new live-sports tier abroad.

Netflix plans to raise the price of its ad-free service a few months after the continuing Hollywood actors strike ends, the latest in a series of recent price increases by the country’s largest streaming platforms.

The streaming service is discussing raising prices in several markets globally, but will likely begin with the US and Canada, according to people familiar with the matter. It couldn’t be learned how much Netflix will raise prices by or when exactly the new prices will take effect. Netflix declined to comment.

Over the past year or so, the cost of major ad-free streaming services has gone up by about 25 per cent, as entertainment companies look to bring their streaming platforms to profitability and lead price-conscious customers to switch to their cheaper and more-lucrative ad-supported plans.

On Tuesday, Warner Bros. Discovery said the monthly price of the ad-free version of its Discovery+ streaming service was rising to $US8.99 ($14.21) from $US6.99, while the cost of its ad-supported platform remains unchanged at $US4.99 a month.

Streamers are also starting to look at how they can create new pricing tiers around exclusive programming, such as live sports, without running the risk of driving people away from their core offerings.

Disney is discussing launching a new live-sports tier of Disney+ in markets outside of the US, according to people familiar with the situation. Last month, Warner Bros. Discovery said it would soon add live sports to its Max streaming service that will eventually cost interested subscribers an additional $US9.99 a month.

Apple is selling Major League Soccer’s MLS Season Pass for $US12.99 a month to people who subscribe to its $US6.99-a-month Apple TV+ streaming platform, and $US14.99 a month to those who don’t. The recent move of soccer superstar Lionel Messi to Inter Miami helped drive a surge in US subscriptions to Apple TV+, The Wall Street Journal previously reported.

Netflix, which stands out from its peers by running a profitable streaming business, has been the lone major streaming company not to raise prices over the past year — focusing instead on boosting revenue by cracking down on password sharing. Its latest price increase came in January of 2022.

The company plans to wait until the dual Hollywood writer and actor strikes end before increasing prices. The Writers Guild of America announced a tentative agreement with studios last week and the Screen Actors Guild, which went on strike in July, restarted negotiations with Hollywood studios this week.

Writers won major concessions in the deal, including new bonus payouts and higher royalties. The streamers will have to find a way to pay increased talent costs — from the writers’ settlement, along with an earlier deal with directors and whatever is finalised with actors.

In July, Netflix stopped offering its basic $US9.99-a-month ad-free tier in the US, which had the effect of significantly expanding the price gap between its $US15.49 standard ad-free plan and its $US6.99 ad-supported tier, which it launched in November of 2022.

On Tuesday, Netflix announced that Jeremi Gorman, the company’s head of advertising, was leaving after just over a year. Netflix named Amy Reinhard, vice president of studio operations, as its new head of advertising.

Next week, the prices of the ad-free versions of Disney’s streaming platforms – Disney+, Hulu and ESPN+ – are officially going up, an increase the company announced during the summer. It marks the second time since last fall that Disney raised prices, following a string of similar announcements by the owners of Peacock, Max, Paramount+ and Apple TV+.

The recent wave of price increases comes after entertainment companies lost billions of dollars as they spent big on content while charging bargain-basement prices for their services in pursuit of fast growth.

Boosting the cost of ad-free streaming platforms is also making their ad-supported alternatives more appealing: When Disney’s latest price increases go into effect on October 12, the advertising-supported versions of Disney+ and Hulu will be $US6 and $US10 cheaper, respectively, than their ad-free counterparts.

“We’re obviously trying with our pricing strategy to migrate more subs to the advertiser-supported tier,” Disney chief executive Bob Iger said in August during a call with investors to discuss the company’s quarterly results.

Disney, Netflix and Warner Bros. Discovery have recently said the ad-supported versions of their streaming platforms generate more money per user than their ad-free counterparts, as the advertising revenue more than offsets the lower subscription cost.

Amazon also is adding a new pricing tier for its Prime Video service. Starting next year, the company will include ads in its Prime Video offering and charge US subscribers $US2.99 more for an ad-free tier.

Over the past year, Netflix has taken other measures to get more money from people watching its service. It began asking households to pay a new monthly fee to share an account with people who don’t live with them, and booted freeloaders in the hopes that they would pay for a new account. Netflix executives said the move was, in effect, a price increase.

The Wall Street Journal