Price Hikes Lift Netflix in UCAN: Growth Opportunity or Pitfall?

Netflix NFLX is reaping the rewards of its pricing strategy in the UCAN (U.S. & Canada) region. In the second quarter of 2025, UCAN revenue growth accelerated to 15% year over year, up from 9% sequentially, reflecting the full-quarter impact of recent price increases. Management noted that subscription price hikes, combined with rising ad revenues and membership expansion, were key contributors to Netflix’s 16% global revenue growth. Netflix’s current UCAN subscription prices are Standard with Ads at $7.99/month, Standard (ad-free) at $17.99/month, and Premium at $24.99/month, after its January 2025 increases.

UCAN remains key for Netflix, with higher average revenue per user boosting revenues and profits. For the third quarter of 2025, the company expects a 31.5% operating margin, up two points year over year, driven by strong content and ad-tier growth. Upcoming U.S. releases — including A House of Dynamite (Oct. 24), The Twits (Oct. 17), Ballad of a Small Player (Oct. 29), The Witcher Season 4 (Oct. 30) and The Diplomat Season 3 (Oct. 16) — are expected to keep engagement high.

Importantly, Netflix does not depend solely on pricing. Its ad-supported plan is seeing strong uptake, while a diverse content pipeline continues to reduce churn risk. Reflecting this momentum, management raised full-year 2025 revenue guidance to $44.8-$45.2 billion, up from $43.5-$44.5 billion.

Ultimately, Netflix’s UCAN price hikes represent both growth lever and potential risk. The strategy has clearly lifted revenues, margins and full-year guidance, demonstrating the company’s ability to monetize its scale. Yet challenges remain — the risk of subscriber churn, mounting pressure from lower-cost competitors and the natural limits of pricing power in a saturated streaming market. Added to that, FX tailwinds that boosted reported results may not persist, underscoring the need for careful execution.

How Rivals Stack Up Against Netflix

Disney DIS has raised prices more moderately than Netflix, with Disney+, Hulu and ESPN+ seeing smaller hikes, often tied to ad-free vs. ad-supported tiers. In October 2024, Disney+ climbed to $15.99 for ad-free and $9.99 for ad-supported, while ESPN+ rose modestly. Disney’s strengths include unmatched franchises like Marvel, Pixar and Star Wars, plus live sports through ESPN. With bundling flexibility, brand power and revenue synergies from parks and merchandising, Disney maintains a broader competitive edge in the streaming price wars.

Amazon AMZN Prime Video has raised prices less aggressively than Netflix, though its January 2024 move to add ads and charge $2.99 extra for ad-free marked a shift. Amazon offsets hikes with bundled value — shipping, music and more — making costs easier to justify. Prime Video also attracts price-sensitive users with ad-supported tiers. With Amazon’s vast scale, global reach and diversified revenue streams, it can invest heavily in content without depending solely on subscriptions, giving Amazon more strategic flexibility than Netflix.

NFLX’s Price Performance, Valuation & Estimates

Shares of Netflix have gained 35.7% year to date compared with the Zacks Broadcast Radio and Television industry’s rise of 32.5% and the Zacks Consumer Discretionary sector’s return of 10.8%.

NFLX’s YTD Price Performance

From a valuation standpoint, Netflix is trading at a forward 12-month price-to-sales ratio of 10.62 compared to the broader Zacks Broadcast Radio and Television industry's forward earnings multiple of 5.01X. NFLX carries a Value Score of D.

NFLX’s Valuation

The Zacks Consensus Estimate for NFLX’s 2025 revenues is pegged at $45.03 billion, reflecting 15.47% year-over-year growth. The consensus mark for 2025 earnings is pegged at $26.06 per share and remains unchanged over the past 30 and 60 days. This indicates a 31.42% increase from the previous year.

NFLX stock currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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