Netflix reportedly planning price hike for ad-free tier

Netflix is reportedly planning to increase the price for its ad-free offering when the SAG-AFTRA Hollywood actors strike draws to a close.

According to the Wall Street Journal, the streamer is discussing the possibility of upping prices in a number of markets, but will most likely begin with the US and Canada. The paper did not report on the size of the increase.

SAG-AFTRA, the actors unition, and the producers’ outfit, the Alliance of Motion Picture and Television Producers (AMPTP) are set to meet again today. Writers’ organisation the WGA struck a deal allowing them to return to work after some five months.

The move comes as Netflix increasingly turns its attention to upping its revenues, but has held off on increasing prices until now. However, it has laid the groundwork for price rises by terminating its ‘basic without ads’ offering in its domestic market. This enabled

Netflix reported revenues of US$8.2 billion for the second quarter of this year, up 2.7% (or 6% on a currency-neutral basis). with an operating profit of US$1.8 billion. Average revenue per member declined by 3%, or 1% on a currency-neutral basis, with Netflix limiting price increases in the run-up to the launch of the company’s paid sharing initiative as part of its crackdown on password sharing.

On the Netflix Q2 earnings Q&A, chief financial officer Spencer Neumann said that “most of our revenue growth this year is from growth in volume through new paid memberships, and that’s largely driven by our paid sharing rollout”, with limited impact from the rollout of advertising and limitations on price changes as the paid sharing model is deployed.

On the earnings Q&A, co-CEO Gregory Peters, commenting on Netflix’s decision to drop its ‘basic-without-ads’ offering in the US, UK and Canada, said that this move was in line with its ongoing optimisation of its pricing and plan structure  and that people formerly on the basic tier “essentially sort into two tiers” – that with advertising and the standard plan.