Netflix, the world’s leading paid-streaming service, has announced plans to increase prices for certain customers in the US, UK, and France. This decision follows the company’s exceptional performance in subscriber growth during the third quarter, where it added 8.76 million customers, surpassing analysts’ expectations. Netflix now boasts a total subscriber base of 247.2 million, attributing its success to a robust programming lineup and its crackdown on password sharing.
One of the noteworthy achievements for Netflix was its crackdown on password sharing, which allowed customers to purchase additional access for friends or family. This initiative proved successful, leading to a surge in new customers without significant increases in cancellations. Consequently, Netflix is on track to add over 20 million customers this year, a substantial jump from the fewer than 9 million added in 2022.
Investor concerns about customer losses due to restricting account sharing have been largely assuaged by the positive results. As a result, Netflix is raising prices for some of its most significant markets, including the US, UK, and France, with increases ranging from $2 to $3.
The company experienced substantial growth in Europe, the Middle East, and Africa during the third quarter, adding almost 4 million customers. Despite these developments, Netflix’s average revenue per customer has remained relatively stable over the past year.
While Netflix predicts slightly lower revenue and earnings than Wall Street projections for the upcoming quarter, the benefits of the password crackdown are expected to continue over the next several quarters. The company’s co-Chief Executive Officer, Greg Peters, expressed satisfaction with the initiative’s progress.
Cracking down on password sharing is part of Netflix’s broader efforts to revitalize growth following a somewhat sluggish period. The company has also introduced an advertising-supported version of its streaming service in 12 markets, with approximately 30% of new customers in those regions opting for the ad-supported option.
In contrast to many competitors who have struggled to navigate the streaming landscape, Netflix has returned to growth and exceeded Wall Street expectations in terms of revenue and profit. The company expects improved profit margins for next year and the potential for further growth in the years ahead.
Additionally, Netflix’s cash flow was boosted by the Hollywood labor stoppage, with management anticipating $6.5 billion in free cash flow for the year. The stoppage had minimal impact on Netflix’s release schedule since many programs were already completed.
Netflix’s success in the quarter extended to content. “Suits,” a series originally aired on USA Network, became the most-watched program on streaming over the summer, largely thanks to its presence on Netflix.
In a letter to shareholders, Netflix emphasized the importance of discipline and long-term focus in building a strong and sustainable streaming business. This stance has clearly paid off, as the company continues to expand its subscriber base and improve its financial performance.