Netflix, the world’s largest streaming service, announced on Tuesday that it will raise the prices of some of its plans in the US, UK, and France, following a surge in new customer sign-ups and better-than-expected earnings in the third quarter of 2023.
The price hike will affect the Basic and Premium plans, which will increase by $1 and $2 respectively, starting from November 2023. The Standard plan, which allows two simultaneous streams, will remain unchanged at $15.99 per month. Netflix said that the price increase will help fund more original content and improve the quality of its service.
“We’re confident that this is an appropriate time to return to a more normal rhythm of price increases,” said Greg Peters, Netflix’s chief operating officer, during the company’s earnings call. “We believe that our members will feel that these new prices are fair because we continue to deliver more value per hour of viewing than almost any other form of entertainment available.”
Netflix added 8.9 million new subscribers globally in the third quarter of 2023, beating Wall Street’s estimate of 6 million. The company reported revenue of $8.542 billion and earnings-per-share of $3.73 for the quarter, exceeding analysts’ expectations. Netflix attributed its growth to its password crackdown, which reduced account sharing, and its ad-supported tier, which it launched in June 2023 in select markets.
“We’re very pleased with our Q3 results. We delivered strong growth in both revenue and operating income as we continue to execute on our long-term vision,” said Spencer Neumann, Netflix’s chief financial officer.
Netflix also faced challenges from the ongoing writers and actors strikes in Hollywood, which affected some of its productions and delayed some of its releases. However, the company said that it has a robust slate of content for the fourth quarter and beyond, including popular shows like “Stranger Things”, “The Witcher”, and “The Crown”.
Netflix also benefited from the success of its original series “Squid Game”, a Korean thriller that became a global phenomenon and generated buzz on social media. The company said that “Squid Game” was watched by more than 142 million households in its first four weeks, making it the most-watched show in Netflix’s history.
“Netflix has shown that it can adapt to changing consumer preferences and market conditions. It has also proven that it can create original content that resonates with audiences around the world,” said Michael Nathanson, MoffettNathanson analyst.
Netflix is still the king of streaming, but it faces increasing competition from rivals like Disney+, Amazon Prime Video, HBO Max, and Peacock. The company said that it welcomes competition and believes that there is room for multiple players in the streaming market.
“Netflix is not a zero-sum game. We’re all competing for entertainment time and engagement versus linear TV and other forms of entertainment,” said Reed Hastings, Netflix’s co-CEO. “We’re thrilled to be competing with such amazing companies.”
Relevant articles:
– Netflix raises prices as it adds 9 million subscribers, Brand Equity, 2023-10-19
– Netflix ups price for Basic and Premium monthly subscriptions after Q3 2023 results, Shacknews, 2023-10-18
– Netflix hikes prices again, CNN Business, 2023-10-18
– Netflix Q3 Earnings Preview: Price Hike Rumors, ‘Squid Game,’ ‘Grand Theft Auto’ Video Game Buzz and Live Sports, Markets Insider, 2023-10-17