Netflix, $NFLX, may be about to raise prices yet again simply because it can

Netflix remains the dominant player in the streaming industry, outperforming many of its competitors. The company recently saw unexpected success with its paid-sharing program, which required users to have their own accounts or be added to existing ones for an additional fee. Despite initial predictions of mass cancellations, this initiative actually resulted in Netflix experiencing its largest subscriber growth in a long time.

The last price hike for Netflix was in 2023, increasing the basic plan from $9.99 a month to $11.99 a month in the U.S. Analysts now anticipate another price increase this year, a move that Netflix has been hinting at previously.

During the Q4 2023 earnings call, Netflix co-CEO Greg Peters mentioned that they had temporarily paused price increases during the rollout of the paid-sharing program, seeing it as a substitute for raising prices. With that program now implemented, Netflix plans to resume its standard approach to price increases, as seen in the U.S., U.K., and France, which were more successful than anticipated.

Essentially, Netflix is indicating that it will continue raising prices because it can, without significant user cancellations. Instead, most subscribers are staying on board, leading to increased revenue and pleasing shareholders.

As for when the next price hike will occur, Peters stated, "We will continue to monitor other countries and assess when we've delivered enough additional entertainment value to ask customers to pay a bit more to keep that positive flywheel going and invest in more great films, series, and games for those members. So, you know, the summary statement might be, 'Back to business as usual.'"

While Netflix claims to be investing in great content for its members, there are criticisms about its hit-or-miss track record compared to competitors like Apple TV+, which has a higher success rate per show but fewer subscribers.

Netflix's strategy appears to be aimed at squeezing out competitors and securing customers' streaming budgets for itself. The idea is that a small price increase on Netflix may seem insignificant if it means canceling subscriptions to other services like Peacock, Paramount+, or Apple TV+. This approach, while cynical, has proven to be effective for Netflix, as it continues to see no negative repercussions from its pricing strategies.