Netflix is reportedly preparing to raise the price of its ad-free service once the Hollywood actors strike concludes.
While discussions are still ongoing regarding price increases in various global markets, it is expected that the United States and Canada will be the first to experience the price hike, The Wall Street Journal (WSJ) reported Tuesday (Oct. 3), citing unnamed sources. The amount of the increase and the effective date are not known.
A Netflix spokesperson declined to comment to PYMNTS.
This decision follows a series of recent price hikes by other major streaming platforms, according to the report. The cost of major ad-free streaming services has risen by about 25% in the past year. Entertainment companies are striving to make their streaming platforms profitable and attract price-conscious customers to their more lucrative ad-supported plans.
In addition to raising prices, streaming platforms are also exploring the introduction of new pricing tiers centered around exclusive programming, particularly live sports, the report said. This strategy aims to mitigate the risk of driving users away from their core offerings.
Warner Bros. Discovery, for instance, recently announced that it would offer live sports on its Max streaming service for an additional $9.99 per month, per the report. Disney is also considering launching a new live sports tier for Disney+ in international markets.
Unlike its competitors, Netflix has refrained from raising prices in the past year, according to the report. Instead, the company has focused on curbing password sharing to boost revenue.
However, with the end of the dual Hollywood writer and actor strikes in sight, Netflix intends to increase prices to cover the rising talent costs resulting from recent settlements, the report said.
Netflix discontinued its basic ad-free tier in the U.S. in July, significantly widening the price gap between its standard ad-free plan and its ad-supported tier, per the report. This move aimed to encourage users to opt for the higher-priced plan.
Disney CEO Bob Iger acknowledged that despite operating-income improvements and cost cuts of streaming losses over the past three quarters, the entertainment company faces a “challenging environment” in the near term.