Emmanuel OchayiNetflix has announced price increase for its premium ad-free plan in the United States, with a $3 per month hike, now priced at $22.99.
The one-stream basic plan will also rise to $11.99 in the United States, while other plans will remain unchanged. This decision comes alongside similar adjustments in the United Kingdom and France.
According to Netflix’s third-quarter earnings report, the company saw 9% year-over-year increase in average paid memberships, adding 8.8 million subscribers last quarter compared to just 2.4 million in the same period last year. Their global paid subscribers reached an impressive 247 million in the third quarter.
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Netflix credits part of this impressive growth to its ongoing efforts to crack down on password-sharing. The company revealed the successful implementation of its “paid sharing” program in all regions of operation. Contrary to expectations, this hasn’t led to widespread cancellations; instead, many who previously shared passwords are now converting to paying subscribers.
Additionally, Netflix reported growth in its advertising tier plans, with memberships increasing by nearly 70% compared to the previous quarter. The company’s revenue for the last quarter reached $8.54 billion, bolstered by the unexpected growth in its membership base. Earnings per share for the quarter stood at $3.73.
This news was met with enthusiasm by investors, as Netflix’s stock soared by 12% in after-hours trading.
In a letter to shareholders, Netflix acknowledged the recent challenges stemming from strikes within the industry. Ted Sarandos, the company’s co-CEO, expressed a strong commitment to resolving the actors’ strike after reaching an agreement with the writers guild last month. Negotiations between SAG-AFTRA and the studios have been halted due to disagreements on the latest proposal, further emphasizing the urgency to find a resolution.
Netflix’s co-CEOs also emphasized their investments in newer areas like gaming and sports content to attract more subscribers. They see games as a significant entertainment opportunity and a strategic move to leverage their existing films and series.
Netflix’s decision to raise prices aligns with a broader industry trend, as major competitors like Disney+ and HBO Max have also increased their rates recently. The rising costs of production, coupled with slower demand post-pandemic, have led streaming services to explore pricing adjustments.
With its focus on profitability, Netflix aims to continue expanding its earnings and is pushing its lower-priced ad tier to achieve this. In the future, the company plans to offer a wider range of price points for subscriptions to cater to the diverse needs of its global audience.
In the words of Netflix co-CEO Greg Peters, “More price offerings could allow entertainment fans from around the world that have different needs to be able to access the great storytelling that our creative partners are doing at a price point that works for them.”
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