Netflix could further revise the prices of its subscriptions in Europe upwards, estimates a US financial and investment advisory firm. After increasing its prices in the United Kingdom and the United States, the VOD service would soon announce the bad news to its European subscribers.
In October 2020, Netflix increased the price of its two most expensive subscriptions in the United Statess. In North America, the Standard rate rose by one dollar, compared to two dollars for the Premium subscription. More recently, the streaming giant applied a similar tariff increase in the United Kingdom. Here again, only the most expensive subscriptions are concerned. The Essential package has not been increased.
To justify its decision, Netflix explained: “We spend over $ 1 billion in the UK on locally produced films, series and documentaries. […] Our price change reflects the significant investments made ”. Note that Netflix has also spent billions of euros to produce content on the rest of the European continent.
On the same subject: Netflix will spend $ 19 billion to produce films and series in 2021, a record
Why is Netflix going to have to increase its prices?
According to financial analysts at The Motley Fool, a private consulting firm based in the United States, Netflix should not be long in apply the same increase to subscriptions in the rest of Europe. “Netflix is producing more and more content in Europe” points out The Motley Fool report. Among Netflix’s flagship European productions is Lupine, a French series starring Omar Sy.
To support its predictions, the consulting firm points out that Netflix has always applied the same tariff changes in Europe as in the United States and the United Kingdom. The Los Santos firm always starts by raising prices in North America before moving on to other continents. Note that several other analysts also expect Netflix prices to increase in Europe.
Thanks to this umpteenth price increase, Netflix hopes that the average revenue per subscription will skyrocket in 2021. With this approach, the streaming leader aims to “Achieve a positive cash flow” shortly. Until now, Netflix has borrowed billions of dollars to produce the original series and films in its catalog, which has led to it increasing its debt.
Now, the service seems to want to pass the cost of productions on to its subscribers. As a reminder, Netflix had already increased the price of its subscriptions in Europe. In June 2019, Netflix applied an increase of € 1 to € 2 on three of its subscriptions in France.
Source: The Motley Fool