Netflix increased subscription prices for some of its streaming plans in the US, Britain and France this week as it shattered new customer expectations.
The company picked up almost 9-million subscribers around the globe, surpassing the 6-million expected by Wall Street analysts, according to LSEG. Netflix said it expected a similar number of additions in this quarter.
The company credited the recent gains to its crackdown on password-sharing and a steady flow of new programming.
The customer gains represented the strongest quarterly uptick since the second quarter of 2020, when lockdowns early in the pandemic led to a surge in streaming subscriptions.
Netflix increased the US price of its premium ad-free plan by $3 (about R57) a month to $22.99. The cost for premium rose by £2 (about R46) to £17.99 in Britain and by €2 (about R40) to €19.99 in France.
Investors welcomed the news, boosting Netflix's shares.
The streaming video pioneer has been searching for ways to boost revenue as it nears market saturation in the US and faces competition from Walt Disney, Warner Bros, Discovery and others.
PP Foresight analyst Paolo Pescatore said the third-quarter growth at Netflix was a testament to its password crackdown and the opportunities for future growth as it moves into advertising.
“It is firing on all cylinders, with recent efforts all heading in the right direction,” he said.
The price hikes were announced in an earnings report that showed the company's global subscriber base reached 247-million at the end of September.
Substantial subscriber gains came in Europe, the Middle East and Africa, where Netflix added nearly 4-million users. More than 70% of its members now reside outside the US.
The streaming giant touted the success of legal drama Suits, which ran on the US cable network from 2011 to 2019. The series, starring Prince Harry's wife Meghan Markle, broke viewing records when it debuted on Netflix this year, becoming the most-watched title across film, original TV and acquired TV on streaming in the US for 12 straight weeks.
“As the competitive environment evolves, we may have increased opportunities to license more hit titles to complement our original programming,” Netflix said in its quarterly letter to shareholders.
The company posted revenue of $8.54bn. Earnings came in at $3.73 a share, ahead of Wall Street's expectation of $3.49.
Netflix's forecast for fourth-quarter revenue of $8.69bn was slightly below analysts' estimates of $8.77bn.
Media companies such as Netflix have been grappling with labour tensions in Hollywood. While film and television writers have ratified a new contract, actors remain on strike.
The work stoppages shut down Netflix productions such as Stranger Things.
The company argues, however, that it has navigated the strikes better than competitors because many of its productions take place outside the US.
The strikes prompted Netflix to revise its projections on content spending to $13bn in 2023, assuming the studios reach a settlement with striking actors “in the near future”.
That was down from the $17bn it expected to spend.
Netflix said it continued to dominate viewership even with the strikes. Its programming accounted for 8% of television screen time, second only to YouTube, the company said, citing Nielsen data.
Reuters
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