Netflix's 18-month-old ad-only subscription plan could increase in price in the near future ($7 per month in the U.S.), but co-CEO Greg Peters says executives "love" the strategic benefits of the current tier.
Netflix CEO Reed Hastings steps down and is replaced by Greg Peters
“In terms of raising that price, we think about it in a way that we think about pricing in general,” he said during the company’s second-quarter earnings call when asked if the company would consider a rate increase. “We think it’s great to have a lower entry price. That means we’re more accessible to more people in our advertising markets. That’s great because they can get access to all the great storytelling that we’re telling there.”
In its quarterly results, Netflix reported a better-than-expected increase of 8 million total subscribers from the previous quarter, bringing its total to nearly 278 million worldwide. In its letter to shareholders, the company said its advertising tier grew 34% in the first quarter and now accounts for 45% of all subscriptions in the areas where it is available. The company doesn't formally break out numbers by subscription tier, but said in May that it had reached 40 million monthly active users, up from 23 million in January. (MAUs are a common metric in ad-supported streaming.)
“Our job is to increase value for all of our members,” Peters explains. “When we get signals from our members — the amount of acquisitions we’re having, engagement, what our retention and churn looks like — that’s when we find the right time to ask our members to pay a little bit more to help us keep that flywheel going. We’ll think about this in the advertising context the same way we would think about it in the non-advertising context.”
