Netflix hiked subscription rates for select streaming plans in the United States, the United Kingdom, and France. This move occurred alongside a remarkable performance in gaining new customers, surpassing projections.
Nearly 9 million subscribers joined Netflix worldwide during the third quarter, exceeding the expectations set by Wall Street analysts, as reported by LSEG. Netflix expressed its anticipation of a similar level of subscriber growth in the current quarter. As a result of these positive developments, Netflix’s shares surged by 13%.
Netflix’s robust performance demonstrates its resilience despite labor disputes in Hollywood, which led to significant production shutdowns in the United States. Netflix’s strategy of producing many of its shows and movies abroad proved to be a major factor driving its substantial increase in new subscribers.
One notable contributor to Netflix’s global success is the live-action adaptation of the beloved Japanese manga series “One Piece.” This adaptation exemplifies the streaming platform’s substantial investment in creating content that resonates with local audiences while maintaining international appeal. Additionally, Netflix successfully attracted new viewers to long-running television series, including “Suits,” a legal drama licensed from Comcast (CMCSA.O), and HBO’s World War Two series “Band of Brothers.”
Netflix’s co-CEO, Ted Sarandos, expressed his satisfaction with the extensive and diverse range of programming the platform offers, stating, “These are the moments when I appreciate our wide and deep programming selection.” Sarandos highlighted that this wealth of content had proven valuable during challenges like the COVID pandemic, allowing them to navigate an extended and uncertain production disruption.
While Hollywood’s film and television writers recently approved a new contract, actors are still engaged in a strike. Sarandos affirmed Netflix’s unwavering dedication to resolving this ongoing strike, emphasizing their commitment to finding a resolution.
Netflix experienced its most robust quarterly increase in subscribers during the third quarter, marking the highest growth rate since the second quarter of 2020. This surge in subscriptions was initially triggered by the pandemic-induced lockdowns, which prompted a significant rise in streaming service sign-ups.
Netflix adjusted the pricing of its premium, ad-free subscription plan, raising it by $3 per month to $22.99 in the United States. A similar increase was implemented in the United Kingdom, where the premium plan now costs 17.99 pounds, and in France, with a price hike to 19.99 euros.
Investors reacted positively to this news, propelling Netflix’s stock price from $346.19 at the market close to $390.80 in after-hours trading.
Analyst Paolo Pescatore from PP Foresight attributed Netflix’s third-quarter growth to its recent measures to curb password sharing and the promising opportunities for expansion, particularly as the company delves further into the realm of advertising.
Netflix’s recent performance is firing on all cylinders, with its recent initiatives moving in the right direction.
The company announced price increases in an earnings report that revealed a global subscriber base of 247 million by the end of September. Significant subscriber growth occurred in Europe, the Middle East, and Africa, where nearly 4 million new subscribers joined. Over 70% of Netflix’s members now reside outside of the United States.
During the quarter, “Suits” became the most-watched title across film, original TV, and acquired TV on streaming in the U.S., maintaining this position for 12 consecutive weeks since it was added to Netflix. This series, featuring Meghan Markle, the wife of Prince Harry, originally aired on the USA cable network from 2011 to 2019.
Netflix indicated in its quarterly shareholder letter that as the competitive landscape evolves, there may be increased opportunities to license more popular titles.
The company reported revenue of $8.54 billion, in line with analyst expectations, while earnings reached $3.73 per share, surpassing Wall Street’s projection of $3.49.
Netflix’s fourth-quarter revenue forecast of $8.69 billion fell slightly below analysts’ estimates of $8.77 billion.
The ongoing strikes by writers and actors led Netflix to revise its content spending projections to $13 billion in 2023, assuming the studios can reach a resolution with the striking actors “in the near future.” This represents a decrease from the initial projection of $17 billion.
Netflix stated that it continues to dominate viewership, with its programming accounting for 8% of television screen time, ranking second only to YouTube, based on Nielsen data.
Reporting by Lisa Richwine; Editing by Aurora Ellis, Bill Berkrot, and Leslie Adler