Netflix increased subscription prices for some streaming plans in the United States, Britain and France on Wednesday as it shattered expectations for new customers, sending its shares surging 13%.
Almost 9 million subscribers joined Netflix around the globe in the third quarter, surpassing Wall Street analysts’ forecast for 6 million, according to LSEG. Netflix said it expected a similar number of additions in the current quarter.
After introducing extra fees to share accounts earlier this year, Netflix is now planning to raise the monthly subscription plan for some streaming plans in the United States, Britain and France.
The company announced the decision in a letter to shareholders on Wednesday, saying customers in these regions can expect to see the price increases today, with new subscription changes rolling out to subscribers in Germany, Spain, Japan, Mexico, Australia and Brazil next week.
“As we deliver more value to our members, we occasionally ask them to pay a bit more,” Netflix said while announcing third-quarter earnings results. “Our starting price is extremely competitive with other streamers and at $6.99 per month in the US, for example, it’s much less than the average price of a single movie ticket.”
Almost 9 million subscribers joined Netflix around the globe in the third quarter, surpassing Wall Street analysts’ forecast for 6 million, according to LSEG. Netflix said it expected a similar number of additions in the current quarter. The strong performance showed Netflix was thriving despite Hollywood labour tensions that shut down a large swath of U.S. production. Netflix makes many of its shows and movies overseas, which accounted for the bulk of its new sign-ups.
Netflix subscription plan
The basic plan will go up to $12 per month, but it is unclear if there will be any changes to how many simultaneous streams come with the subscription or if extra members are allowed. The basic plan is no longer available for new Netflix subscribers. Premium will now cost $23 a month, and the price of the platform’s ad-supported ($7) and standard plans ($15.50 per month) will not change.
While Netflix hasn’t raised subscription rates since January 2022, it eliminated the basic $10 plan this past summer and charges an extra $8 per person if you share your membership with someone outside your household.
Netflix increased the U.S. price of its premium ad-free plan by $3 per month to $22.99. The cost for premium rose by 2 pounds to 17.99 pounds in Britain and by 2 euros to 19.99 euros in France.
“These are the times I’m glad we have such a rich and deep and broad programming selection,” Netflix co-CEO Ted Sarandos said after the release of the quarterly results. “The same was true during COVID when we were able to manage the slate through a prolonged and pretty unpredictable production interruption.”
Hollywood’s film and television writers ratified a new contract this month, but actors remain on strike. Sarandos said Netflix was “totally committed to ending this strike.”
GLOBAL GAINS
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 subscribers. More than 70% of its members now reside outside the United States.
During the quarter, “Suits” became the most-watched title across film, and original TV and acquired TV on streaming in the U.S. for 12 straight weeks after it hit Netflix. The series, starring Prince Harry’s wife, Meghan Markle, originally aired on the USA cable network from 2011 to 2019.
“As the competitive environment evolves, we may have increased opportunities to license more hit titles,” Netflix said in its quarterly letter to shareholders.
The company posted revenue of $8.54 billion, in line with analyst forecasts. Earnings came in at $3.73 per share, ahead of Wall Street’s expectation of $3.49.
Netflix’s forecast for fourth-quarter revenue of $8.69 billion was slightly below analysts’ estimates of $8.77 billion.
The writer and actor strikes prompted Netflix to revise its projections on content spending to $13 billion in 2023, assuming the studios settle with striking actors “soon.”
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