Netflix’s password-sharing crackdown possibly attracted 6 million new subscribers in the third quarter, hinting at potential price hikes in its upcoming earnings report.
So far, the only profitable major streamer hasn’t increased ad-free prices but is curbing password-sharing to tap into over 100 million non-subscribers.
“Netflix now closely resembles a utility in many markets,” said an analyst at Bernstein. “The challenge of being labeled a utility is how a maturing company continues finding growth.”
The company said it may raise prices after the recent end of the Hollywood actors’ strike, following the Writers Guild of America’s approval of a new contract with major studios.
Analysts predict that Netflix will increase the prices of its ad-free subscription options in the near future. This move aims to encourage more subscribers to opt for the tier with advertisements, which generates higher revenue per user.
Since the password crackdown, most new Netflix subscribers prefer ad-free plans. The standard plan with ads costs $6.99 per month, while ad-free plans start at $15.49.
“Using these tactics, Netflix will likely double its ad-supported viewership next year,” said Insider Intelligence analyst Ross Benes.
According to Benes, he expects Netflix to show more ads to users over time, catching up with rivals.
In the third quarter, the ad-supported tier is expected to earn around $188.1 million with 2.8 million new subscribers, according to Visible Alpha estimates.
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