The Netflix logo displayed on a phone screen and its website on a laptop screen are seen in this photo taken in Krakow, Poland, on June 8, 2023.
Jakub Purzycki | norphoto | Getty Images
“As we invest in and improve Netflix, we will occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive wheel of additional investment to continue improving and growing our services,” the company told investors. .
Netflix launched its advertising tier in November 2022 as it cracked down on password sharing to give users a cheaper way to access content from the world's largest streaming device. So far, not many people have signed up. Netflix announced earlier this month that it has 23 million monthly active users in its advertising category. That could be 12 million to 15 million paid subscribers, estimates Evercore ISI analyst Mark Mahaney.
Netflix has more than 260 million global subscribers after adding 13.1 million subscribers in the fourth quarter — the company's largest fourth quarter ever.
The takeaway for Netflix executives may be that most of its audience is content to pay what Netflix charges. A standard Netflix subscription in the US currently costs $15.49 per month. The ad tier costs $6.99 per month – the same price at which it launched in 2022.
Netflix announced on Tuesday that WWE's Raw is coming to the service in 2025. It's Netflix's biggest move into live entertainment yet. Netflix is paying more than $5 billion for 10 years of Raw.
With more content, Netflix may have the leverage to convince its users that they should pay more money. The company said it plans to increase its content consumption by high-single digits year over year, according to its shareholder letter.
Disney plans to launch a direct-to-consumer ESPN channel later this year or in 2025. This product will likely cost much more than Netflix. This will also provide the company with cover to raise prices, as consumers may view Netflix as a better price-to-value offering compared to competitive streaming.
Netflix did not announce a price increase in its quarterly letter nor did it say when it would come.
But rest assured: it's coming.
Watch: Strong subscriber growth leads to another strong quarter for Netflix
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