Netflix raises prices indirectly: basic plan to be cancelled soon

Revenues and the number of subscriptions at Netflix rose again in the fourth quarter of 2023. Now the streaming giant also wants to increase prices - at least indirectly. This can be seen in the current quarterly report.

In concrete terms, the cheapest basic plan to date, which costs 11.90 francs per month in Switzerland, is to be cancelled in countries that have already introduced the ad-supported plan. Canada and the United Kingdom will make the start in the second quarter of 2024, but it is not yet known when the basic plan will also be cancelled in Switzerland and Germany.

Cunningly hidden price increases

The logic behind the cancellation of the basic subscription is obvious: because the streaming giant generates more revenue from advertising customers, as many users as possible should be persuaded to take out an ad-supported plan. If Netflix discontinues the basic tariffs, the gap between the ad-supported and the cheapest ad-free plan will increase. In Switzerland, this would then be the standard plan for 18.90 francs per month.

It is obvious that today's basic subscription customers would rather switch to the cheaper plan than the more expensive one, even if this means that Netflix can only be watched with ad breaks. In the USA, the ad-supported plan costs 6.99 dollars per month. In Germany, it costs 5 euros. No matter what subscribers decide: In the end, Netflix earns more per plan without having directly increased prices.

But that's not all. The basic plan can no longer be booked in countries that have introduced the ad-supported plan since last autumn. These include Canada, the United Kingdom and Germany. This suggests that Netflix's decision to no longer offer the basic plan in future is now also aimed at existing customers, not just new customers.

Treat for the American market: wrestling is coming!

Whether Netflix, with its record profits, even needs such (hidden) price increases is more than debatable. What is clear, however, is that Netflix is increasingly becoming a threat to traditional TV channels with its rapid growth.

In the last quarter, for example, the streaming market leader recorded an increase of 13 million customers. Netflix now has 260.3 million subscriptions worldwide. Buoyed by this success, the Californian company is now seriously venturing into live entertainment: the weekly wrestling show "Raw" from World Wrestling Entertainment (WWE) is moving to Netflix after 30 years on linear television.

In order to seal this partnership, Netflix is investing an impressive five billion dollars in WWE programmes. Although the financial details of the deal have not been publicly disclosed, the financial service Bloomberg reports that Netflix has committed to providing this sum over a ten-year period.

The agreement illustrates the shift in the balance of the TV business in favour of streaming services. The US broadcasting group NBC is finally losing one of its most reliable ratings drivers, which generated high viewer numbers and advertising revenue. What's more, sport is still one of the main reasons for American consumers to purchase an expensive cable TV subscription.

On the other hand, the wrestling league hopes to one day gain popularity far beyond America thanks to Netflix's global reach. The deal still only applies to North and South America and the United Kingdom. At the same time, Netflix co-head Ted Sarandos is certain that the advertising dollars will follow the WWE programmes to his platform - especially thanks to the advertising-supported subscription model.