Netflix raised prices for certain streaming plans in the US, UK, and France on Wednesday after exceeding projections for new subscribers, causing a 13% jump in its stock.
Netflix reported that in the third quarter, nearly 9 million subscribers joined their service worldwide, exceeding the predicted 6 million by Wall Street analysts. The company also stated that they anticipate a similar number of new subscribers in the upcoming quarter.
Netflix’s impressive performance demonstrated its success in the midst of labor disputes in Hollywood that resulted in the halt of a significant portion of US production. The majority of Netflix’s new subscribers were attributed to its production of shows and movies in other countries.
Netflix highlighted the worldwide success of One Piece, a live-action version of the popular Japanese manga, as evidence of their significant investment in culturally relevant stories that have global appeal. The platform also drew in fresh viewers for established TV programs, including the legal show Suits, acquired from Comcast, and HBO’s World War II drama Band of Brothers.
Netflix’s co-CEO Ted Sarandos expressed gratitude for their diverse programming options following the release of the quarterly results. He also noted that this was especially beneficial during the COVID pandemic, where they were able to successfully navigate production delays and uncertainty.
The writers of Hollywood’s movies and TV shows approved a new agreement recently, but actors are still on strike. Mr. Sarandos declared that Netflix is fully dedicated to resolving this strike.
During the third quarter of the year, the company experienced its highest increase in customers since the second quarter of 2020. This was largely due to the surge in streaming subscriptions caused by lockdowns during the early stages of the global pandemic.
Netflix raised the monthly cost of its premium ad-free plan in the United States by $3 to $22.99. In Britain, the price for premium increased by £2 to £17.99, while in France it went up by €2 to €19.99.
Investors were pleased with the announcement, causing Netflix’s stock to rise to $390.80 in after-hours trading, up from its previous close of $346.19.
According to analyst Paolo Pescatore from PP Foresight, Netflix’s growth in the third quarter is proof of its efforts to address password sharing and its potential for expansion through advertising.
“He mentioned that it is performing at its best, with all recent initiatives moving in a positive direction.”
The company’s earnings report revealed that they have reached a global subscriber base of 247 million as of the end of September, along with the announcement of price increases.
Netflix saw significant growth in its subscriber base in Europe, the Middle East, and Africa, with an increase of nearly 4 million subscribers. Currently, over 70% of its members are located outside of the United States.
In the past three months, Suits has been the top-viewed content on streaming platforms in the US, including film, original TV, and acquired TV. This continued for 12 consecutive weeks following its release on Netflix. The show, featuring Meghan Markle, who is married to Prince Harry, first premiered on the USA cable network in 2011 and ran until 2019.
In its quarterly report to shareholders, Netflix stated that as the competitive landscape changes, there may be a greater chance for us to obtain licenses for popular titles.
The business reported a total income of $8.54 billion, matching the predictions of analysts. Profits were recorded at $3.73 per share, surpassing the anticipated $3.49 by Wall Street.
Netflix’s projected revenue for the fourth quarter is $8.69 billion, which falls slightly below analysts’ predicted amount of $8.77 billion.
The recent strikes by writers and actors have caused Netflix to adjust its estimated budget for content spending to $13 billion by 2023, contingent upon the studios reaching a resolution with the striking actors “soon.”
This is a decrease from the anticipated spending of $17 billion.
According to Nielsen data, Netflix remains the top choice for viewership, accounting for 8% of television screen time. The only platform ahead of Netflix is YouTube, as reported by the company.