Streaming platform Netflix announced to shareholders on Oct. 18 that it had met market expectations and grew its subscriptions by large margins; in response, its shares shot up the following morning.
According to its shareholder letter, Netflix saw a 70 percent increase in ads plan memberships from quarter two to quarter three. It added nearly 9 million subscribers in Q3, far surpassing analysts’ expectations. Its overall subscriber count is now at 247.2 million.
Its revenue went from $7.85 billion in Q4 2022, to $8.16 billion in Q1 2023, $8.18 billion in Q2 2023, to now $8.54 billion in Q3 2023.
It predicts an increase to $8.69 in Q4 2023. It gave a nod to the power of its originals like “One Piece” and “The Witcher” in driving sales, but claimed the subscriber boost was due to its password-sharing crackdown.
Netflix now intends to immediately raise prices for its basic plan for U.S. users (no longer available to new users) from $9.99 to $11.99, and raise the price for its premium plan from $19.99 to $22.99. It will also raise prices in the U.K. and France. It is doing this as it is confident it can wean consumers off cheaper monthly subscription plans. Moves such as this to improve profitability are occurring across streaming platforms.
On Thursday morning, Netflix shares surged by 13.5 percent in response to the reported earnings. It grew more quarterly subscribers than in the past three years, since the COVID pandemic lockdowns sent everyone to the couch.
Netflix raised prices again. In the US, the top-tier ad-free plan now costs $22.99 per month, up by $3. The changes were rolled out alongside an earnings report https://t.co/Y8rwLwmySb pic.twitter.com/MbRXbxg4m0
— Reuters (@Reuters) October 19, 2023
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Netflix boasted that it was able to triumph over the obstacle posed by the Hollywood writers’ strike.
“The last six months have been challenging for our industry given the combined writers and actors strikes in the US,” the company wrote. “While we have reached an agreement with the WGA, negotiations with SAG-AFTRA are ongoing. We’re committed to resolving the remaining issues as quickly as possible so everyone can return to work making movies and TV shows that audiences will love.”
Netflix along with members of the Alliance of Motion Picture and Television Producers (AMPTP) agreed to higher wages and benefits. When the AMPTP completes negotiations with the actors, it is expected that content creation costs will rise.
“We spent hours and hours with SAG-AFTRA over the last few weeks and we were actually very optimistic that we were making progress,” said Netflix co-CEO Ted Sarandos Wednesday. “But then at the very end of our last session together the guild presented this new demand on top of everything of a per subscriber levy, unrelated to viewing or success, and this really broke our momentum unfortunately.”
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