Netflix used to be the obvious solution for those wanting to ditch their cable service, but with some of the company's recent decisions, this move might not be so obvious anymore. In addition to price hikes and password-sharing crackdowns, Netflix is now ending subscriptions paid for through iTunes, a loophole that's allowed many users to pay $9.99 for years (via The Verge).
Apple made in-app subscriptions possible in 2010, but Netflix initially didn't want to pay a 30% cut to Apple, so the company held out on adding in-app subscriptions until 2015. You could only subscribe in the app via iTunes until late 2018, when Netflix changed its mind and revoked in-app subscriptions. If you were one of the lucky few to subscribe between 2015 and 2018, the subscription amount was grandfathered in—until now.
While ending legacy subscriptions is something most people probably saw coming, it's odd that Netflix didn't seem to give much warning. Plus, this decision is rolling out amid recent rumors of Netflix raising prices yet again in 2024 (via Variety).
Is Netflix doing too much?
The password-sharing crackdown from Netflix means that anyone who wants to watch content on Netflix has to pay for their own household account. Removing legacy subscription options forces users to either pay more for their existing plan or downgrade to an ad-ridden tier (that usually earns a company more money than paid tiers).
Now, Netflix plans to "resume [their] sort of standard approach toward price increases" in 2024, according to Netflix co-CEO Greg Peters. On the company's Q4 2023 earnings call, he also said that the price changes went "better than we forecasted" in the United States, United Kingdom, and France.
Despite price increases and restricted password sharing, Netflix continues to gain new subscribers and grow in total revenue. In 2023, Netflix gained 29.5 million net new subscribers, and UBS analysts predict Netflix might add 20 million new subscribers in 2024.
UBS analysts also estimate that with a price hike, increased revenue from ads, and new subscribers, the company's total revenue growth in 2024 will be about 15%, compared to only 7% growth in 2023.
Netflix has definitely lost plenty of subscribers in the past year or two following its password-sharing restrictions and price hikes. But with the projected growth estimated by UBS analysts, are these decisions anywhere close to being the downfall of Netflix? With so much free content available, are Netflix original movies and TV shows worth a $5 monthly price hike, or $10 or $20?
The estimated growth of Netflix provided by UBS analysts is, of course, only predictions, but they're predictions based on historical data. Only time will tell if Netflix is flying too close to the sun with another price hike.
