Netflix co-CEO explains why the company keeps increasing prices for ad-free plans

Netflix co-CEO Greg Peters spoke to Verge about the company's price hikes.

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• Netflix co-CEO Greg Peters explained the streamer's price hikes for ad-free plans.
• He cited viewer demand for diverse, quality shows and adding value as the reason behind the increases.
• Netflix's strategy has led to a significant subscriber boost and $9.37 billion in Q1 revenue.

It seems that every year viewers are watching streaming prices climb more and more — and Netflix is no exception.

Netflix co-CEO Greg Peters explained the company's thinking behind the price hikes in a new interview.

Peters recently told The Verge that the multiple price hikes to its ad-free plans in recent years are an effort to offer consumers a wider range of options — which require added investment to add that value.

"[T]hey want a higher diversity of shows, they want more quality shows, so that's our job," Peters said. "If we do that well, we'll go back and occasionally ask members to pay a little bit more to keep that flywheel running."

Last July, the streaming giant dropped its Basic plan, previously its cheapest ad-free option at $11.99 a month, leaving subscribers to choose between the Standard ad-free plan, which costs $3.50 more, or the more affordable Standard with Ads plan, which costs $6.99 a month. They could also opt for Netflix's priciest plan, Premium ad-free, which increased from $19.99 to $22.99 a month last October.

When asked if Netflix is aiming to increase the number of viewers in the ads tier, Peters responded that "it's definitely not the goal."

"What I would say is that our job is to add more value to the entertainment service that we are offering," he said.

While Netflix may not intend to steer people to its ad-supported plan, those members receive some more good news: the co-CEO hopes to decrease the ad load over time to "provide higher-relevance, higher-value ads."

Peters said that the costs and ad distribution come down to having "a set of prices with the right features so that basically we can attract more members around the world, and they can enjoy the incredible stories that we have available."

And it seems to be working. Netflix smashed expectations for its first quarter earnings, increasing subscribers by 9.33 million worldwide and earning $9.37 billion in revenue.

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