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Netflix will raise its price for its basic and premium services, the company said on Wednesday, as it added new users even after it clamped down on subscribers sharing access to the streaming platform.
The home of popular shows such as House of Cards, The Recruit, Squid Game and Stranger Things said that it will raise its basic plan to about $12 per month, a $2 increase, and $23 per month for its premium services. Its ads-based service will remain at nearly $7 and the standard plan will stay the same at $15.5 per month.
"While we mostly paused price increases as we rolled out paid sharing, our overall
approach remains the same—a range of prices and plans to meet a wide range of needs," the company said in a letter to shareholders. "As we deliver more value to our members, we occasionally ask them to pay a bit more."
Netlfix's increase of some of its subscription prices joined other media companies, such as Disney, that have raised rates for streaming services.
One of the pioneers of the streaming business, Netflix has faced a variety of challenges over the past few years as competition for eyeballs increased with viewers finding more options to feed their appetite for content. But the company looked to have overcome the headwinds of a competitive market and the recent strike by writers and actors to deliver better-than-expected results.
The company added nearly 9 million new paid users to have more than 247 million global subscribers in the third quarter of 2023. This is close to an 11 percent increase from the same time a year ago, Netflix said. Revenue was up 7.8 percent for the year to $8.5 billion. Investors appeared jubilant about the company's results, as the company's shares went up nearly 13 percent at one point during after-hours trading on Wednesday evening, according to Yahoo Finance data.
Popular compared to competitors
Netflix said its engagement beat all competitors but YouTube.
"Our share of TV screen time in the US was 8% in September, which is greater than any streamer other than YouTube and we believe gives us substantial room for growth as we continue to improve the quality of our slate," the company pointed out.
One of its biggest hits recently is not a Netflix Original. Suits, a legal T.V. drama that aired its first episode more than a decade ago and ended in 2019, broke viewing records when it began streaming on the platform in July. It was the most-watched piece of content across film, original TV and acquired TV in the U.S. for about three months from late June, a development that may push the streamer to license even more hits, the company said.
"As the competitive environment evolves, we may have increased opportunities to license more hit titles to complement our original programming," Netflix told shareholders. "We believe this will deliver additional value for our members (i.e., engagement), as well as for rights holders who benefit from the increased awareness and revenue that Netflix delivers."
The company said its fall and winter schedule can look forward to the final season of its series about the British Royal Family The Crown and new movies from the likes of Oscar-winning stars such as Julia Roberts, Mahershala Ali and Natalie Portman.
The company said that it hasn't been hurt by its policy to discourage sharing of passwords, a popular phenomenon among users.
"The cancel reaction continues to be low, exceeding our expectations, and
borrower households converting into full paying memberships are demonstrating healthy retention," Netflix said.
The company said its ads-related segment will not be "material" to its business in 2023 but that it remained optimistic about its potential. In the third quarter, ads membership jumped about 70 percent from the previous quarter and accounted for 30 percent of new members where the service is available.
"This growth has been driven by improvements to our offering—including two
streams, higher quality video and a programming slate that's now essentially on par with our other plans," the company said. The winding down of its basic plan, which is now not available to new subscribers, helped as well.
"Going forward, we'll continue to improve the feature set, for example next month we're introducing downloads, while also working to include the ads plan in device and [internet service provider] partner bundles," Netflix said.
Update 10/18/23, 20:05 p.m. ET: This story has been updated to add more context.
About the writer
Omar Mohammed is a Newsweek reporter based in the Greater Boston area. His focus is reporting on the Economy and ... Read more