Netflix is on a roll to increase the prices of some of its plans in the United States and other regions. In pursuit of tackling issues related to password sharing, the company is going all out to secure maximum profit margins without hurting its user base. Netflix is now planning to increase the price for its Basic and Premium tiers in some regions, which could adversely impact the user base.
Netflix is planning to increase the price of its Premium and Basic subscription tiers to boost revenue
To be precise, Netflix plans to increase the price of its Basic and Premium tiers in the United States, UK, and France. The Basic subscription plan will jump from $9.99 to $11.99 per month in the United States and the Premium plan will see an increase from $19.99 to $22.99 a month. As for the ad-supported and the Standard plans, the prices remain the same, $6.99 and $15.49, respectively.
Netflix has gradually improved its subscriber count year over year. Last year the streaming giant gained only 2.4 million new subscribers and gained $7.9 billion in revenue. This year, the company gained 8.8 million new subscribers which is a major jump from last year, and recorded the revenue at 8.54 billion. The company's plans to increase the price for some of its plans were announced at the company's earnings call for the third quarter this year. It remains to be seen how the platform will perform by the end of this year.
It is too early to speculate how users will respond to the price increase of the Basic and Premium plans. Users could switch to other streaming companies such as Disney+ and HBO Max. Netflix continues to add new movies, shows, and documentaries to the mix every day, allowing users to stay hooked to their plans. However, the new price increases could be a turning point for the company.
Currently, the company's Premium tier is the only plan that allows users to watch movies and shows in 4K with spatial audio. The rest of the plans, including the Standard and the Ad-supported tier only offer 1080p resolution. The company is also working to reduce the number of password sharing among users. According to the company, users' reaction to cancel password sharing is lower than expected which means that the crackdown could be intensified in the future. If the plan goes through, the company could gain more subscribers in the future, ultimately securing higher revenues.
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