Netflix raises prices in some countries after best subscriber growth in years

Los Angeles – Netflix is raising prices for some customers in the United States, Britain and France after posting its best quarter for subscriber growth in years, a sign of management’s confidence in the future at an otherwise dreary time in media.

The world’s top paid streaming service said on Wednesday that it added 8.76 million customers in the third quarter, far exceeding analysts’ forecasts and boosting its overall subscriber base to 247.2 million. The company credited a strong programming slate and its crackdown on password sharing. 

Investors had worried that Netflix might lose customers if it forced people who were sharing accounts to buy their own subscriptions. But the crackdown has led to a surge in new customers without a major increase in cancellations.

Netflix is now on track to add more than 20 million customers in 2023, a big jump from fewer than nine million in 2022.

The successful roll-out of paid sharing, which lets customers purchase additional access for friends or family, has emboldened Netflix to raise prices in some of its biggest markets.

On Wednesday,

Netflix increased the cost

of its most expensive plan in the US by US$3 (S$4) to US$23 and its basic plan by US$2 to US$12, while keeping two other plans the same. It is taking similar steps in Britain and France, two other large markets.

Europe, the Middle East and Africa accounted for the largest share of Netflix’s growth in the third quarter. The company added almost four million customers in those regions. The average amount Netflix makes per customers has not changed much in the past year.

This quarter, Netflix predicts revenue of US$8.69 billion and earnings of US$2.15 a share, both slightly below Wall Street projections. The company said subscriber additions would be similar to the just-ended quarter.

Cracking down on password sharing is one of a couple of major initiatives at Netflix, which is trying to revive growth after a sluggish year or two.

The company also rolled out an advertising-supported version of its streaming services in 12 markets. About 30 per cent of new customers in those markets opted for advertisements in the last quarter, it said.

Netflix has returned to growth as many of its peers struggled to figure out their streaming operations.

The Walt Disney Company, Warner Bros Discovery and Paramount Global have all cut costs and fired staff to improve their financial performance. They have spent billions of dollars to fund new streaming services that can replace their declining linear TV networks.

But most of the newer streaming services lose money.

On the other hand, Netflix reported third-quarter revenue and profit that beat Wall Street expectations. Earnings rose to US$3.73 a share, beating estimates of US$3.56, while revenue grew 7.8 per cent to US$8.54 billion, slightly ahead of forecasts.

Cash flow was boosted by a labour stoppage in Hollywood. Management expects US$6.5 billion in free cash flow in 2023, up from a prior forecast of at least US$5 billion. This includes about US$1 billion less in spending on content due to the strikes.

Shares of Netflix have risen 17 per cent in 2023.

“We’ve shown that with discipline and a focus on the long term, you can build a strong, sustainable streaming business,” the company said in a letter to shareholders. BLOOMBERG