Netflix raises UK and German prices, ad tier hardest hit

Netflix raised its prices in the United Kingdom and Germany on 4 September. The ad-supported plan went up hardest in both countries. That is the plan Netflix built to bring in price-sensitive viewers and sell them to advertisers.

The UK ads plan rises a third, from £5.99 to £7.99

In Britain the plan with ads went from £5.99 to £7.99 a month, a rise of a third. Standard moved from £12.99 to £13.99 and Premium from £18.99 to £20.99. The charges for an extra member outside the household also went up.

New customers pay the new price straight away. Existing ones move over after their next billing date, usually within 30 days of being told.

The German ads plan jumps two fifths, to €6.99

Germany saw the same shape and a steeper bottom end. The ads plan went from €4.99 to €6.99, a rise of two fifths. Standard moved from €13.99 to €15.99 and Premium from €19.99 to €21.99.

Netflix also stopped offering its cheap ad-free basic plan to new German customers. The company points to more content and new features as the reason for the increases.

The cheap tier is no longer the cheap tier

The pricing tells advertisers something. An ad tier works as a media product when it is cheap enough to pull in the viewers who will not pay full price. Raising it faster than the ad-free plans narrows that gap, and with it the argument that the tier delivers a different audience from the rest of the service.

Netflix is not alone in charging more. Apple TV raised its US price to $14.99 a month last week. Services are also buying local shows to justify the number, as Disney+ did by taking hundreds of M6 episodes in France.

Free channels are moving the other way

While paid tiers get dearer, free ad-funded viewing keeps expanding. ZDF added more than 15 themed channels to its streaming app and RTL is testing cheaper production.

For a media buyer the useful question is what happens to the ad tier’s subscriber numbers over the next two quarters. Netflix reports those figures rarely and reluctantly, so the honest planning assumption is that the ad audience in Britain and Germany may grow more slowly than the sales pitch implies.