Netflix UK and Ireland price hikes raise questions over ad-free future
Netflix has hiked its prices in the UK and Ireland for the second time in 18 months as it stands by its ad-free offering.
Netflix ups prices in UK and Ireland / Netflix
Effective immediately, Netflix’s popular plan will increase by £1 a month to £10.99, and its premium plan, which allows Netflix to be watched on four screens, will rise by £2 to £15.99. For the first time since launching in the UK, Netflix’s basic plan will also increase by £1 to £6.99.
A Netflix spokesperson claimed the updated prices “reflect the investment we have made in our service and catalog and will allow us to continue making the series, documentaries and films our members love, as well as investing in talent and the creative industry.”
Netflix’s global content budget hit $13.6bn in 2021, a 26% year-on-year increase, and budgets are expected to reach $18.9bn by 2025. Its UK and Ireland budget is around $1bn, with 60 TV and film projects in the works.
“We have always been focused on providing our members both quality and clear value for their membership,” the statement added. Around 14 million Brits subscribe to Netflix and 600,000 in Ireland.
The UK and Ireland hikes follow Netflix US’s price increases in January, where its popular plan went up from $14 to $15.50 a month.
The news has added fuel to the fire over whether the streamer will cave and introduce ads to its service. Renewed questions come in a week in that saw Disney+ introduce an ad-supported tier and Netflix’s own chief finance officer say “never say never” when asked about adding ads.
Tom Harrington, head of TV at Enders Analysis, argues that unlike other services Netflix can retain its customers through price hikes. “The extent of what Netflix can charge is controlled by the value that the consumer places on the offering and of video content in general,” he says.
“Netflix has clearly, continually, increased the value that it provides its subscribers, through both user experience and programming. This is not something that all its competitors can feasibly argue.”
Harrington does counter this to say crossing the £10 threshold for the standard tier “may well provoke in subscribers a moment of clarity and evaluation.”
This could play into the hands of Netflix’s competitors, he says. “Due to their lesser content offerings and user experiences, they must trail behind Netflix in price point: the perception that their service is cheap, rather than just cheaper than Netflix, is a small but important distinction.”
Ryan Cook, managing director at addressable provider Criteo, was surprised by Netflix’s price hike. “Given the momentum at the moment with ITVX and Disney+ announcing new ad-supported ways to watch premium new content, there’s certainly an opportunity for Netflix to follow suit without raising too many eyebrows,” he says.
Cook agreed that Netflix’s content pipeline requires significant funding, but questioned if it was the right move considering UK SVOD slumps, referencing that only 2.3% of Brits took out a new subscription in Q2 2021.
“Time will tell if this latest move is laying the groundwork for a new set of subscription options to be announced later this year,” he adds.
Companies that have more than just their subscription revenue are in a much better position, according to Juraj Vanko, chief marketing officer AVOD platform Filmzie. "It’s a reaction to this subscription fatigue and the economic climate where the cost of living is soaring. Providing AVOD as an option is a way to secure greater audience share and diversify revenue streams," Vanko says.
Vanko argues that AVOD is in a better position for the future than SVOD and demand for ad-supported will increase. "Tolerance for watching a couple of ads in exchange for flexibility and cost-saving will only increase too. Good value for money is becoming much more important to people."