Subscription Economy Faces New Consumer Expectations, Regulatory Demands

While Netflix raised membership prices in Japan, Italy, Spain, and parts of Europe, the Middle East and North Africa (EMEA), it faces an evolving subscription economy framed by consumer demand for transparency and control.

This week’s ruling by the Federal Trade Commission introducing a “click-to-cancel” rule, effective in April 2025, aims to simplify subscription cancellations, responding to widespread frustration with complicated processes. The move aligns with a broader trend where companies, including Capital One, Atomic and Mastercard, are rolling out subscription management tools to help consumers easily track and manage their recurring expenses.

Additionally, news organizations like CNN and Reuters are enhancing their revenue through paywalls, with CNN charging $3.99 per month for select content and Reuters introducing a straightforward $1 weekly subscription.

These developments highlight the industry’s move toward subscription models in response to rising operational costs. While increasing prices may boost revenue, the measure risks alienating cost-sensitive consumers in an environment with numerous subscription service options. As Netflix introduces new content strategies, like broadcasting NFL games to enhance advertising revenue, it must balance growth opportunities with the potential backlash from consumers juggling multiple subscription platforms.

Netflix released its third-quarter earnings results Thursday (Oct. 17), reporting a 15% rise in revenue, to $9.82 billion. The streaming giant added 5.07 million subscribers during the three-month period, compared to 8.76 million new subscribers during the same quarter last year.

The company ended the quarter with 282.7 million subscribers globally, compared to 247.15 million subscribers a year ago. Ads membership rose 35%, and the company’s ad tech platform is scheduled to launch in Canada in the fourth quarter and more broadly in 2025.

“As we seek to grow engagement and deliver more value to our members, we’re also working to improve our monetization by refining our plans and pricing,” the company said in a shareholder letter Thursday. “Key is ensuring that we have a range of prices and plans to meet a variety of needs. Earlier this month, we increased prices in a few countries in EMEA plus Japan, and starting tomorrow, we’ll increase prices in Spain and Italy. We phased out the Basic plan in the U.S. and France this past quarter, and we’ll do the same in Brazil later in Q4.”

When asked if a membership price increase might occur in the United States, co-CEO Greg Peters said during an earnings call that the company’s approach to pricing has stayed “remarkably consistent over many, many years. And our core theory is that we got to work really, really hard to make sure that we are delivering more value to members every quarter. And then we sort of assess based on how that’s going, metrics like engagement, like acquisition and retention.”

After acknowledging the price increases announced in other parts of the world, Peters added the company regularly evaluates the value being delivered to members until such time “it’s appropriate to ask those members to pay a little bit more.”

Netflix’s engagement metrics were two hours a day per paid membership, on average.

“Programming for such a large, engaged audience, with so much variety and great quality, is hard,” the shareholder letter said. “It’s why streaming services which lack our breadth of content are increasingly looking to bundle their offerings (selling and discounting their services together, channel offerings, etc.). Netflix is already an extraordinary package of series and films (licensed and original), and increasingly games and live events — all in one place and for one price, easy to use and great value for money.”

Included among Netflix’s programming will be live sporting events like the Mike Tyson-Jake Paul fight Nov. 15 and NFL games on Christmas Day.

“[We] believe strongly based on our history that if we can just keep focusing on [being] a little bit better every day at delivering more entertainment value to our members, we’re going to have an incredible business,” Peters said during the call.