Netflix Raises Subscription Prices and Gains Subscribers Amid Industry Challenges
- Posted on October 19, 2023
- Technology
- By Arijit Dutta
- 339 Views
In a bold move, Netflix has decided to raise subscription prices, affecting customers in the United States, Britain, and France. The price hike was unveiled on Wednesday, coinciding with an unexpected surge in new subscribers, which caused Netflix's stock to jump by 13%. This strategic shift suggests the company's resilience in the face of industry challenges, including ongoing labor strikes in Hollywood.
In a bold move, Netflix has decided to raise subscription
prices, affecting customers in the United States, Britain, and France. The
price hike was unveiled on Wednesday, coinciding with an unexpected surge in
new subscribers, which caused Netflix's stock to jump by 13%. This strategic
shift suggests the company's resilience in the face of industry challenges,
including ongoing labor strikes in Hollywood.
Surprisingly, almost 9 million new subscribers joined
Netflix's ranks worldwide during the third quarter, outperforming Wall Street
analysts' predictions by a substantial margin. According to data from LSEG,
they had expected a mere 6 million additions. Netflix has expressed its anticipation
of a similar number of new subscribers in the current quarter, reinforcing its
steady growth trajectory.
Netflix's remarkable performance amidst the Hollywood
labor tensions is partly attributed to its extensive production outside the
United States, which constituted the majority of its new sign-ups. "One
Piece," a live-action adaptation of a popular Japanese manga series,
symbolizes Netflix's significant investment in content that resonates with
local audiences and transcends international boundaries.
Additionally, the streaming giant has successfully
attracted new viewers to long-running TV shows like "Suits" and HBO's
"Band of Brothers." These acquisitions from Comcast and HBO have
proven to be valuable additions to Netflix's extensive content library.
Netflix's co-CEO, Ted Sarandos, expressed his
satisfaction with the diverse programming selection, which has allowed the
company to navigate through unpredictable production interruptions during
challenging times, including the COVID-19 pandemic.
Despite the recent ratification of a new contract by
Hollywood's film and television writers, actors are still on strike. Sarandos
assured that Netflix remains committed to resolving the ongoing strike.
This surge in subscribers during the third quarter is the
most significant Netflix has witnessed since the second quarter of 2020, during
the early days of the global pandemic when lockdowns led to a dramatic increase
in streaming subscriptions.
Netflix implemented price increases in the United States,
the United Kingdom, and France. In the U.S., the premium ad-free plan now costs
$22.99 per month, an increase of $3. In Britain, the premium plan rose by 2
pounds to 17.99 pounds, while in France, it increased by 2 euros to 19.99
euros.
Investors responded positively to these developments,
pushing Netflix's stock price to $390.80 during extended trading, up from its
closing price of $346.19.
Analyst Paolo Pescatore from PP Foresight noted that Netflix's growth in the third quarter is a testament to its efforts to curb password sharing and explore advertising opportunities, marking a positive trajectory for the company.
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The earnings report also revealed that Netflix's global
subscriber base reached 247 million by the end of September. Notably,
substantial subscriber growth occurred in Europe, the Middle East, and Africa,
with nearly 4 million new subscribers added during the quarter.
As Netflix continues to evolve in a competitive market,
it is actively exploring opportunities to license more hit titles, promising a
bright future for the streaming service.
The company reported revenue of $8.54 billion, aligning
with analyst forecasts, and earnings per share at $3.73, surpassing Wall
Street's expectations of $3.49.
Looking ahead, Netflix expects fourth-quarter revenue of
$8.69 billion, slightly below analysts' estimates of $8.77 billion.
The ongoing strikes in the entertainment industry have
compelled Netflix to revise its content spending projections, reducing the
anticipated expenditure from $17 billion to $13 billion in 2023, contingent on
a resolution of the labor disputes with actors.
Despite the industry challenges, Netflix continues to
dominate viewership, with its programming occupying 8% of television screen
time, second only to YouTube, as per Nielsen data.