Netflix Raises Subscription Prices After Password Restrictions, Anticipates Actor's Strike Ending

Netflix has taken firm action against attempts to share passwords (photo: doc. pexels)

JAKARTA - Netflix has taken firm action against attempts to share passwords, which is likely to increase the number of subscribers by around 6 million in the third quarter. The streaming pioneer is expected to set the stage for price increases when it reports earnings on Wednesday, October 18.

As the only profitable major streaming company, Netflix has refused to join rivals like Walt Disney in raising ad-free prices this year. Instead it limits password sharing outside the household to reach the more than 100 million viewers who use its service without a subscription.

"Netflix is now akin to a utility in many markets," said analysts at Bernstein. The company may raise prices after the Hollywood actors' strike ends.

After five months of strikes that rocked Hollywood, the Writers Guild of America (WGA) last week agreed to new contracts with major studios.

However, Netflix has weathered the strike well thanks to its larger international presence and strong content lineup.

After a slow start to the ad program plan it rolled out last year, analysts said they expect Netflix to raise the price of its ad-free option in the coming months to encourage more customers to switch to other tiers, where ads help bring in more revenue per user.

So far, most viewers who have subscribed to Netflix after password restrictions have opted for the ad-free plan. The standard plan with ads costs $6.99 per month, while the ad-free plan starts at $15.49.

"Using this tactic, Netflix will likely double the number of ad-supported viewers next year," said Insider Intelligence analyst Ross Benes. He predicts Netflix will show more ads to users over time, to catch up with competitors.

It is estimated that the advertising layer will bring in revenue of around US $ 188.1 million (IDR 2.9 trillion) in the third quarter ending in September, with additional subscribers of 2.8 million, according to Visible Alpha estimates.

Overall, Wall Street expects the streaming company to post its strongest quarter of subscriber additions this year, according to LSEG data.

Revenue in the third quarter likely rose 7.7% to 8.54 billion US dollars (IDR 134.1 trillion), the fastest growth in five quarters, thanks to strong programming including the latest seasons of "Sex Education" and "Virgin River."