Netflix will report its summer-quarter earnings on Thursday, when media analysts count on an announcement that you simply’re actually, actually not going to like.
In a word despatched to his purchasers (and obtained by IndieWire), Evercore ISI analyst Mark Mahaney forecast a Netflix worth hike “in the next 3-9 months.”
A Netflix spokesperson didn’t reply to IndieWire’s request for touch upon this story.
Although Mahaney’s forecast affords a bit extra specificity than most, it isn’t precisely a daring prediction. The final Netflix month-to-month worth enhance got here precisely one yr in the past, and that one was a “success,” LightShed Companions analyst Wealthy Greenfield wrote on Wednesday.
We’re due, and we all know it. (It’s change into widespread for streamers to elevate their charges on an everyday cycle: Disney+ elevated its month-to-month worth in October 2024, similar to it did in October 2023. Paramount+ prefers June will increase.)
You and I could not like this inevitability, however NFLX holders will.
“Investors are likely to need to see evidence of pricing leverage in 2025 to make up for slowing account growth,” Andrew Marok wrote in his word to Raymond James purchasers. They don’t essentially want to make a transfer instantly, he wrote, however with out a lot room left for subscriber progress, particularly within the U.S. and Canada, Netflix will “need to show some progress into early 2025.”
Everybody’s out right here hedging on the timeline, however they’re all reaching the identical conclusion: It’s a matter of time earlier than your invoice goes up. Effectively, possibly not for these with the bottom month-to-month payments.
Members on Netflix’s ad-supported tier have been spared the worth hikes the final time round — a “surgical” maneuver, Wedbush analyst Alicia Reese instructed IndieWire. She expects the identical technique to proceed if and when Netflix raises charges once more — each time that’s.
The ad-supported tier right now prices $6.99/month, and in principle that may keep put. The preferred plan right now is $15.49/month, however possibly not for lengthy. (Reese is much less satisfied than others that we’ll get one other Netflix price-hike announcement in one other Q3 shareholder letter.)
Netflix, like different mature streamers, is pushing customers to its ad-supported tier (although not as aggressively as Amazon Prime Video). Advert gross sales solely add up at scale, and even the mighty Netflix has not gotten there — but. (Possibly don’t spend your first decade publicly swearing off commercials?)
A subscription service’s common income per person (ARPU — what Netflix calls ARM, or common income per member) might be increased on its ad-supported tier than the ad-free one(s). If Netflix shareholders need to see their NFLX shares close to $800 apiece, a brand new and vital income stream wants to emerge.
The good Netflix comeback was intently tied to its password-sharing crackdown. The ensuing income surge is nearly over; Reese and her Wedbush colleagues predict that Netflix’s promoting tier will “become the primary growth driver in 2026.”
Shortly after the 4 p.m. ET launch of Netflix’s Q3 earnings (and the potential price-increase announcement), media analysts could have a possibility to take part in a Q&A with senior Netflix management. Common earnings-call etiquette states that you simply restrict your self to one query and one followup; Wealthy Greenfield has 9.
On Wednesday, Greenfield posted his full checklist of queries for co-CEOs Ted Sarandos and Greg Peters (and some different execs). #1: “Will there be a 2024 price increase?”
It’s the #1 query on our minds too, Wealthy.