Netflix revealed significant gains in its subscriber count this past summer, surpassing estimations set by industry specialists. It appears that the streaming giant’s drive against sharing passwords between non-household viewers is successfully transforming non-paying users into subscribers.
In a bid to amplify its revenue, Netflix has instituted a price rise for its top-tier streaming plan by $2, taking it to $23 per month in the U.S, a 10% increase. Similarly, the ad-free basic streaming package now costs $12, marking a rise of another $2. However, the $15.50 per month fee for the most favored streaming option will remain, as will the $7 plan offering periodic advertisements.
Netflix also reported raised prices for subscribers in the UK and France. The company witnessed an impressive addition of nearly 8.8 million global subscribers in the quarter from July to September, triple the gain for the same period in the previous year. These milestones mean the streaming titan now boasts around 247 million global subscribers, surpassing the 243.8 million predicted by FactSet Research analysts.
The company’s financial results also outshone investors’ anticipations. The Los Gatos, California-based corporation garnered $1.68 billion or $3.73 per share, a 20% yield increase from the previous year. Meanwhile, the revenue experienced an 8% bump, reaching $8.54 billion.
Following the release of this positive quarterly report, Netflix experienced an over 12% share price growth in extended trading. Already this year, Netflix shares have risen approximately 30%, backed by the robust performance of its streaming service amidst a thriving competitive landscape.
In the first nine months of this year, Netflix has procured over 16 million subscribers, outpacing the total number of new subscribers last year, which stood at 8.9 million. However, this is still a small fraction of the 36 million additional subscribers that Netflix accrued in 2020, when the pandemic-induced stay-at-home orders proved an unexpected windfall for the company.
Despite current disputes in the entertainment industry, centered on complaints by writers and actors against unfairly low payments by streaming services like Netflix, the company has successfully navigated through these challenging times. It‘s leveraged a reserve of finished TV shows and movies, in addition to international productions unaffected by labor disputes.
In the quest to replenish its library of original content after work resumes, Netflix anticipates spending about $17 billion on TV series and films next year. The move to curtail password sharing practices has prompted more viewers, who previously used the service for free, to open their accounts. This change has not only expanded Netflix’s subscription base but also introduced an opportunity for existing viewers to share their account details outside their households for a higher monthly fee.
Netflix co-CEO Greg Peters, in a recent video conference call, expressed his satisfaction with the password-sharing crackdown. He further predicted that this initiative will continue to drive subscription growth for several more quarters.
Netflix’s positive strides in countering password-sharing could now liberate the management to explore other avenues for revenue generation. This includes the low-priced plan featuring ads that was launched a year ago. While the decision to introduce commercials into its service has not yet been a major advantage, analysts predict a promising future in this space. The likely secret to success is the potential for utilizing Netflix’s wealth of viewer information for precisely targeted advertising, akin to tech giants Google and Facebook.
Netflix shares that around 30% of incoming subscribers are opting for the $7 plan with commercials, a trend that may invite more advertising spending. The hikes in premium plans might also encourage more subscribers to switch to the ad-supported mode.
