Netflix (NFLX.O) announced price increases for select streaming plans in the United States, Britain, and France, a move that coincided with the company’s impressive performance as it surpassed expectations for new customers. The news sent Netflix shares soaring by 13% in a single day.
In the third quarter, nearly 9 million subscribers joined Netflix globally, surpassing the 6 million forecast by Wall Street analysts, according to data from the London Stock Exchange Group (LSEG). The company has expressed optimism about adding a similar number of subscribers in the current quarter.
This remarkable performance demonstrates that Netflix continues to thrive despite the Hollywood labor tensions that have temporarily halted a substantial portion of U.S. production. Notably, Netflix produces many of its shows and movies overseas, accounting for a significant portion of its new sign-ups.
One of the factors contributing to Netflix’s global success is its investment in content with a local appeal that resonates worldwide. “One Piece,” a live-action adaptation of the renowned Japanese manga series, exemplifies this strategy. Additionally, Netflix has attracted new audiences to long-running television shows such as the legal drama “Suits,” which it licensed from Comcast (CMCSA.O), and HBO’s World War Two series “Band of Brothers.“
Netflix’s co-CEO, Ted Sarandos, expressed his satisfaction with the company’s diversified programming selection, which has allowed them to navigate through disruptions like the COVID-19 pandemic and unpredictable production interruptions.
While Hollywood’s film and television writers have recently ratified a new contract, actors are still on strike. Sarandos confirmed Netflix’s commitment to ending this strike, underscoring the importance of a stable workforce in the entertainment industry.
The third quarter of 2023 marked the most substantial surge in Netflix’s customer base since the second quarter of 2020, driven by the global pandemic’s early lockdowns, which led to an unprecedented surge in streaming subscriptions.
Netflix adjusted subscription prices with a hike in the U.S. for its premium ad-free plan, increasing by $3 per month to $22.99. In the UK, the premium plan rose by 2 pounds to 17.99 pounds, and in France, the cost increased by 2 euros to 19.99 euros.
Investors received this news with enthusiasm, driving Netflix shares up to $390.80 in extended trading from a close of $346.19.
Paolo Pescatore, an analyst at PP Foresight, credited Netflix’s growth to its recent efforts to crack down on password sharing and its expansion into advertising. “It is firing on all cylinders, with recent efforts all heading in the right direction,” he noted.
The price increases were announced alongside an earnings report that revealed Netflix’s global subscriber base reached 247 million at the end of September. The company reported significant subscriber growth in Europe, the Middle East, and Africa, where it added nearly 4 million subscribers. Remarkably, over 70% of Netflix’s members now reside outside the United States.
Netflix has capitalized on popular titles to maintain its dominance in the streaming industry. “Suits,” a series that gained immense popularity on Netflix, became the most-watched title across film, and original TV, and acquired TV on the streaming platform in the U.S. for 12 consecutive weeks. The series originally aired on the USA cable network from 2011 to 2019.
Netflix remains focused on offering engaging content and mentioned in its quarterly letter to shareholders that it may have increased opportunities to license more hit titles as the competitive environment evolves.
Financially, Netflix posted revenue of $8.54 billion, in line with analyst forecasts, while earnings came in at $3.73 per share, surpassing Wall Street’s expectation of $3.49.
For the fourth quarter, Netflix anticipates revenue of $8.69 billion, which is slightly below analysts’ estimates of $8.77 billion. The recent strikes by writers and actors have prompted Netflix to revise its content spending projections for 2023 to $13 billion, assuming that studios will reach an agreement with striking actors “in the near future.” This marks a decrease from the previously expected $17 billion in spending.
According to Nielsen data, Netflix programming accounts for 8% of television screen time, making it the second most-watched platform, only behind YouTube. Netflix’s continued popularity and subscriber growth reaffirm its position as a major player in the streaming industry.
