Will your next Netflix bill cost more? Growth slowdown sparks fresh questions

Dubai: Netflix subscribers could face further price increases over time as the streaming company looks to protect revenue growth while spending on live broadcasts, short-form videos, games and new entertainment formats.

No fresh subscription increase was announced alongside the company’s second-quarter results, and there is no indication that prices will change immediately. Netflix, however, said recent increases had gone well and delivered the expected results, leaving pricing available as a source of future growth.

The company earned $3.4 billion during the April to June quarter, an increase of more than 9% from $3.13 billion a year earlier. Revenue advanced 13% to $12.56 billion from $11.08 billion.

Revenue came slightly below the $12.58 billion expected by analysts, while earnings of 80 cents per share were one cent above forecasts.

Netflix shares fell as much as 8% after the company projected slower revenue growth during the current quarter.

A price reduction appears unlikely based on the company’s current strategy, although Netflix has announced no immediate increase.

The streaming group expects pricing, membership growth and advertising to remain important revenue drivers during 2026. Its official guidance has previously identified pricing as one of the contributors to full-year growth.

Netflix also states that subscription rates may change when it adds programmes and features or responds to inflation, taxes and other local market conditions. Customers are notified before a change takes effect.

The outlook therefore points towards stable prices in the immediate term, with a greater chance of selective increases later than broad reductions. Any adjustment could vary by country and subscription package because Netflix pricing and billing conditions differ between markets.

Price increases are also likely to depend on whether new programmes and features keep viewers engaged. Subscribers may become less willing to absorb higher monthly charges when competing platforms and free short-form video services offer sufficient alternatives.

Netflix expects revenue to increase about 12% during the third quarter, below the roughly 13% expansion anticipated by analysts.

Second-quarter growth of 13.4% was its weakest in nearly three years, fuelling concerns that the company may find it harder to sustain its earlier pace.

Netflix has stopped publishing regular subscriber totals, which were previously the main measure used to judge its performance. The company said subscribers watched 97 billion hours of content during the first half, an increase of 2% from the same period last year.

The modest rise in viewing hours drew attention because Netflix continues to compete for consumers’ time against YouTube, TikTok and other entertainment platforms.

Netflix nevertheless believes there is substantial room to grow globally.

Netflix is widening its offering beyond its established mix of films and television series, which means subscribers are likely to see a broader range of formats within the same app.

The strategy could result in more live sport and entertainment, shorter videos, podcasts and interactive games being placed alongside traditional series and films.

Beginning August 3, subscribers in the US, Canada, UK, Ireland, Australia and New Zealand will gain access to videos as short as two minutes through licensing agreements with publishers including Penske Media, BuzzFeed Studios, Condé Nast, Hearst Magazines and People Inc.

Netflix has not said when the short-form offering will reach the UAE or other markets.

Live events are currently included in every Netflix plan without an additional charge, according to the company’s support information. Future changes to individual rights packages or subscription structures have not been announced.

Netflix expects its advertising operation to generate about $3 billion this year, making the lower-priced ad-supported plan increasingly important to its business.

Higher advertising income could help Netflix limit how frequently it raises subscription rates, particularly for customers willing to watch commercials. It could also lead the company to place more emphasis on programmes that attract large audiences at a particular time, including live sport, concerts and reality formats.

The ad-supported plan was introduced in 2022, but Netflix does not offer a free subscription option. Members can change packages or cancel online at any time.

Strong advertiser demand may give Netflix another way to increase revenue without relying entirely on higher monthly charges. Weaker engagement, however, would place greater pressure on pricing, advertising volumes and the performance of its new programme formats.

Netflix said it was seeing strong interest in live programming, including the Women’s World Cup.

A live performance by K-pop group BTS attracted more than 18 million viewers in March, while the success of “KPop Demon Hunters” continued to support its animated slate.

The company said “Swapped” was on course to become its second-most-watched original animated film, behind “KPop Demon Hunters.”

Other popular programmes during the quarter included Harlan Coben’s “I Will Find You,” the British production “Legends,” South Africa’s “The Polygamist” and Korean drama “Teach You a Lesson.”

Netflix is also using large language models and voice functions to improve programme discovery, including searches that allow subscribers to describe what they want to watch in natural language.

- With inputs from AP.