Netflix raises prices after subscriptions soar by 9m
Netflix added 8.8m streaming subscribers in its third quarter following a crackdown on password sharing, blowing expectations out of the water, as it revealed its latest price increases.
The surge in membership brings its global tally to about 247m subscribers, defying the projections of analysts, who had predicted 6.1m additions.
The streaming giant also announced a plan to raise prices in the US, UK, and France. In the UK, basic subscriptions will rise by £1 to £7.99, with premium memberships increasing by £2 to £17.99.
Efforts to curb password sharing also resulted in lower-than-expected cancellations.
Netflix said its success was also due to a steady stream of popular content.
Netflix outperformed Wall Street expectations with earnings of $3.75 a share, above the consensus estimate of $3.52.
The news drove a more than 12 per cent increase in Netflix stock price during extended trading last night, bringing its year-to-date gains to nearly 30 per cent.
Netflix’s subscriber growth, which has already exceeded 16m in the first nine months of the year, comes at a competitive time in streaming.
It faces market saturation and stiff competition from industry heavyweights such as Disney and Warner Bros Discovery.
But Netflix’s latest price hike could negatively affect these rivals, argued Paolo Pescatore, founder of PP Foresight.
Price rises are inevitable
Paolo Pescatore
“Consumers will evaluate all offerings and might look to scale back on streamers they no longer need. Hence why Netflix’s broad programming and continued focus to release titles will always resonate with users and remain an indispensable service,” Pescatore explained.
“Furthermore, this will help protect its margins with any increase in licensing costs as well moves into new areas such as retail and live experiences,”
“Price rises are inevitable and we can expect this most likely on an annual basis; akin to traditional pay TV and other services,” he added.
Netflix last increased its price in 2022 as it tried to keep pace with its increasing content budget.
“The new hike would help to cover higher costs for content after the recent negotiations with Hollywood writers, actors, and directors,” said David Poole, senior technology and media strategist at Publicis Sapient, digital transformation company.
“But with data showing that teenagers and Gen Z as a whole are spending much more time on YouTube than Netflix, there is huge pressure to maintain subscriber engagement and any significant price increase will make it that much harder to rival YouTube,” Poole warned.