Not again?! Netflix is increasing its prices – and nobody can figure out why

No, this isn’t a wind-up. The respected Wall Street Journal has heard from well-informed sources that Netflix plans to raise its prices in the coming months. Yet again. The last time this happened in Switzerland was at the beginning of 2022, while Germany was slapped with a price increase the year before. Meanwhile, US customers saw subscription fees rise last year. When account sharing was scrapped in 2023, on the other hand, subscribers all over the world were affected. The introduction of a new business model, paid account sharing, recently granted Netflix record subscription numbers.

Basically, there’s no good reason for Netflix to raise prices again. Even so, I already know how Netflix will justify the increases. Rising production costs, the need to invest in new content – the usual mumbo jumbo. The streaming giant might even have the audacity to blame Hollywood strikers. In fact, scratch that – I bet they will. The thing is, this excuse just doesn’t fly.

Could the Hollywood strikes really be to blame?

Until recently, two of Hollywood’s three main unions were on strike: the Writers Guild and the Actors Guild. Last week, the writers’ strike came to an end. Amongst the concessions won was a new, improved and above all well-deserved pay packet. More specifically:

• An increase in the minimum amount previously paid for high-budget films.
• A share in the annual revenue of streaming services.

This revenue share will be calculated in proportion to the viewing figures of the show or film in question. Streaming services don’t have to communicate these numbers publicly, but at the very least, they have to reveal them to the Authors Guild. At the beginning of the strike, the Guild calculated that its demands would cost Netflix just over 0.2 per cent of its 2022 annual revenue. That’s 68 million of its 31.6-billion-dollar annual turnover, to be precise.

Netflix currently boasts 238 million subscribers (website in German). If the streaming service were to pass the screenwriters’ demands directly onto its customers, this would be equivalent to a surcharge of around 0.29 cents per subscription per year. From a PR point of view, it’d certainly be convenient for Netflix to lay the blame for the price increases at the door of the strikers. However, they’d have absolutely no factual basis for doing so.

A price increase no one understands

Just how much subscription prices are set to increase hasn’t yet come to light. And the streaming giant hasn’t yet officially commented on the rumours. In the past, however, the California-based corporation has always ramped up its fees by 1-2 US dollars per month. In Switzerland, the figure even rises to 2-3 Swiss francs per month. Along with Liechtenstein, this makes Switzerland the most expensive country in the world to have a Netflix subscription. If you ask me, it’d be madness for Netflix to crank up its fees again.

In any case, it’s rumoured that the company will wait for the actors’ strike to end before putting up its prices. After all, it’s hard to justify price hikes at a time when strikes are resulting in less content instead of more.

On top of this, Netflix has been making a profit for over 15 years, raking in 4.49 billion US dollars in 2022 (website in German). Admittedly, this was the first decrease in profits in the corporation’s history. With the new subscription models, however, the company should return to a better position this year. That is, better than the rest of the competition who’re in the red right now – especially Disney. As a matter of fact, Disney has much more compelling reasons for its upcoming (hidden) price increase.

I’m curious to see what Netflix has to say about all this. Above all, I’m keen to find out what kind of mental gymnastics will be done in the boardroom to concoct a halfway reasonable-sounding justification. The company appears to be financially sound. Not only that, but the unions’ demands are unlikely to result in any noticeable losses in sales or profits. New subscription models such as paid account sharing are already creating new revenue streams. Plus, the company has already used the last couple of years to hike up its prices.

So why bump up fees yet again? Your guess is as good as mine.