Netflix is expected to raise the price of its streaming plans in 2024, according to analysts at UBS Securities, which should accelerate revenue and profit growth as they continue to account for an even larger share of overall TV viewing. It is said that
Netflix to raise subscription prices
“We expect a rate hike by Netflix this year,” UBS analysts led by John Hodulik said in a Feb. 27 research note, with higher advertising revenue boosting the company’s total revenue by 15% in 2024. I predict that will happen. Supported demographic and healthy subscriber growth (compared to 7% in 2023).
Netflix co-CEO Greg Peters said on a fourth-quarter 2023 earnings call that the company had largely put most of its price increases on hold last year due to the rollout of its paid sharing program. But now the company has been able to resume its standard approach to price increases, as seen in the US, UK and France, and it has worked out better than expected.
Peters continued: “We will continue to monitor other countries and assess whether they offer sufficient additional entertainment value.” [customers] Paying a little more to keep a positive flywheel allows us to invest in even more great movies, series, and games for those members. In other words, the summary statement might be “back to business as usual.” ”
UBS raised Netflix’s 12-month price target to $685 per share from $570 and maintained a “buy” rating, sending the stock up 1.5% to above $596 per share in morning trading. . According to a report from UBS, Netflix’s share of US TV viewing rose to 7.9% in January 2024 from 7.7% in December. The streaming service also has strong pricing power, as it charges less per hour than its competitors.
Netflix’s ad-free consumption price is estimated at 30 cents per hour compared to other platforms such as Hulu, Peacock, Disney+, Max, and Paramount+. The company is a major beneficiary of structural changes in media, as traditional media companies focus on streaming profitability as the linear TV business declines.
As the UBS team writes, “The new plan includes 1) price increases, 2) platform consolidation, 3) library curation (with associated asset write-downs), and 4) content spending reductions ( 5) New focus on content licensing. ”
“We see Netflix as the ultimate beneficiary of this industry rationalization, as streaming’s goals shift from subscriber growth to profitability for traditional media companies,” UBS analysts wrote. ing.
Netflix has previously raised the price of its basic plan.
Last October, Netflix raised the price of its basic plan in the US from $9.99 to $11.99 per month, and made similar price increases in the UK and France. Netflix hasn’t announced any specific plans to increase subscription prices in 2024, but executives have said price hikes are being considered.
“Although price increases have mostly paused with the rollout of paid sharing, our overall approach remains the same, with a variety of prices and plans to meet a wide range of needs and provide more value to our members. “As we do so, we occasionally ask our members to: Please pay us a little more,” Netflix said in a letter to shareholders accompanying its third-quarter results.
Netflix is lowering the price to $11.99 per month for its Basic plan, which includes no ads but is no longer available to new subscribers, and $11.99 per month for its Premium plan, which streams in Ultra HD and allows you to watch on up to four devices simultaneously. The price was raised to . $22.99 per month, up from $9.99 and $19.99, respectively.
