Netflix increased its prices again. The company announced the price hikes on Wednesday for some subscription tiers in the United States, the United Kingdom, and France.
According to its third-quarter earnings report, the premium ad-free plan in the United States will now cost $22.99 per month, starting on Wednesday, which is a $3 increase. The one-stream basic plan in the United States will also rise to $11.99.
Netflix is Increasing Its Prices Again
It also recorded a 9% year-over-year increase in average paid memberships, gaining 8.8 million subscribers last quarter, which is a significant contrast to the 2.4 million added in the third quarter last year. In total, Netflix reported 247 million paid global subscribers in the third quarter.
The company credited part of its robust subscriber growth to its ongoing crackdown on password-sharing. Netflix confirmed that its “paid sharing” program is now available in every region where the company operates. Furthermore, fewer customers than expected canceled their memberships as a result. Instead, many customers who previously shared passwords have transitioned into becoming full paying subscribers, according to Netflix.
Netflix also said that adoption of its advertising tier plans continues to grow, with membership up almost 70% compared to the previous quarter.
The company brought in $8.54 billion in revenue last quarter, boosted by higher-than-expected growth of its membership base. Earnings per share for the quarter came in at $3.73.
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In a letter to shareholders, Netflix described the past six months as “challenging” due to the strikes by the writers’ guild and actors’ guild that occurred this summer. An agreement with the writers’ guild was reached last month, and Netflix expressed its dedication to resolving the remaining issues with the striking actors. Negotiations between SAG-AFTRA, representing Hollywood’s actors, and the studios were put on hold last week.
Netflix’s co-CEO, Ted Sarandos, mentioned that discussions came to a halt because the guild’s latest proposal went too far.
Increasing Prices in Tandem With its Competitors
Netflix increased its prices last in January 2022, but its main competitors have all hiked their prices since then. Disney+ raised prices by $3 per month in August, marking the second increase this year. Hulu also raised its prices, and Max, which is owned by Warner Bros. Discovery, implemented its first-ever price increase in January 2023, adding $1 per month.
Hollywood studios are continually seeking higher fees from streaming services for their TV shows and movies, as production costs are on the rise. Additionally, the surge in consumer demand for streaming services seen during the pandemic has significantly slowed, impacting the revenue growth of streaming platforms. Raising prices is one strategy to address this challenge.
Producing streaming shows will become increasingly costly following the conclusion of the writers’ strike, which raised pay and benefits for Hollywood writers. Moreover, the actors who are currently on strike are also requesting higher compensation.
Netflix stands out as one of the few profitable streaming services, and investors are insisting on the company’s continued earnings growth. Hence, Netflix has been promoting its lower-priced ad tier, allowing it to mitigate some of the expenses by maintaining consumer prices at a lower level while gradually increasing charges to advertisers.
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