After having held off on increasing prices this year, it was reported last week that Netflix is expected to raise the subscription fee for its ad-free service in the coming months. The move is likely to take effect after the ongoing Hollywood actors strike ends – the first time since January 2022 that the popular streaming service, Netflix, will raise its prices.
As the latest in the ‘streamflation’ trend bringing increased costs to users, how is the potential price hike likely to impact the millions of Netflix subscribers?
New data from CivicScience find that among all current Netflix users and those likely to subscribe, 29% would subscribe to an ad-free plan (either by continuing to subscribe or starting a new subscription), such as Netflix Standard or Premium plans. However, 39% say they would cancel their subscription if a price hike took effect.
Looking exclusively at the most impacted audience – those who subscribe to an ad-free plan, starting at $15.49 a month – shows that nearly half are likely to keep their ad-free plan with a price hike. Few would switch over to the newer Netflix Standard with ads plan, which currently costs $6.99 per month, while more than a third would opt to cancel their subscription entirely. This suggests that Netflix ad-free subscribers place a premium on being able to watch Netflix content without ad interruptions, but for many, only at the current price.
Frequent users would be impacted the most strongly. Respondents who watch Netflix content weekly to monthly are the most likely to subscribe to an ad-free plan. If a price hike were to occur, data show ad-free subscriptions would drop significantly for these users. Monthly users would be particularly affected – they are the most likely to switch to the ads-based plan, while also the most likely to cancel their subscription.
Continued inflation is taking a toll on the financial health and economic confidence of consumers, which has been reflected in the volatility of the streaming market this year. Consumers are cutting down on the number of services they use due to cost, according to CivicScience data. Ongoing monthly tracking shows that 33% of U.S. adults have reduced or plan to reduce spending on streaming subscriptions, up from 28% in January. Additionally, the monthly percentage of those with four or more streaming subscriptions fell from September to October, continuing a decline seen throughout the year.
Price concerns are certainly top-of-mind for current Netflix ad-free plan subscribers. More than a third express increased price sensitivity over the last year, more so than those who subscribe to the ads-based plan.
Additional insights from the Netflix data show:
- 50% of respondents who say they would cancel their Netflix plan due to a price increase also report they have become more price sensitive over the last 12 months.
- Ad-free plan subscribers index as the most likely to be concerned about a recession, and so cost-cutting may be seen as a priority.
- The 35-54 crowd are the most likely to fall off from their Netflix ad-free membership – also indexing as the most price-sensitive age group.
Content availability also has a role to play, as the writers and actors strikes slowed production this year. Recent CivicScience data find that 29% of streamers say they are having trouble finding content to watch, up from 24% in April. This could influence Netflix cancelation – more than a third who would cancel their Netflix subscription due to a price hike say they are running out of content, compared to less than a quarter who would continue subscribing to an ad-free plan.
CivicScience frequently covers consumer response to breaking media and entertainment news developments. For even more insights, get in touch.