SAN FRANCISCO—— Netflix revealed on Wednesday that it has gained more midsummer subscribers than anticipated by industry analysts. This suggests that the video streaming service’s efforts to restrict password sharing successfully convert previous freeloaders into paying customers.
Netflix also announced that to generate even more revenue, the cost of its most expensive streaming service in the United States would increase by $2 to $23 per month or 10% and that its cheapest, ad-free streaming plan would cost $12 or another $2 increase. The $15.50 monthly price for the most popular streaming option on Netflix in the United States and the $7 monthly plan with intermittent commercials will both remain unchanged.
Additionally, pricing increased for subscribers in the United Kingdom and France.
From July to September of last year, the organization acquired an additional 8.8 million subscribers globally, more than three times the number acquired at the same time in the previous year. During that period, Netflix struggled to regain customers after experiencing a decline in the first half of last year. As a result, Netflix now has approximately 247 million subscribers globally, which is significantly more than the 243.8 million predicted by analysts surveyed by FactSet Research.
Additionally, Netflix’s financial performance exceeded analysts’ estimates, determining investor anticipation. In addition to revenue increasing 8% to $8.54 billion, the Los Gatos, California-based firm earned $1.68 billion, or $3.73 per share, a 20% increase from last year.
Netflix’s Password-Sharing Crackdown Reels In Subscribers As It Raises Prices For Its Premium Plan.
In extended trading, the company’s stock price increased by over 12 percent following the release of its most recent quarterly results. As accumulating evidence that its video streaming service is outperforming the majority in a crowded field of competitors that are challenging the financial limits of many households, Netflix shares have increased by about 30% so far this year.
Already surpassing the 8.9 million subscribers it gained for the previous year, Netflix has amassed over 16 million subscribers through the initial nine months of this year. However, this figure remains a small portion of the over 36 million additional subscribers that Netflix acquired in 2020 when the service capitalized on the pandemic as a lucrative opportunity to entertain individuals confined to their homes.
Despite progress in gaining subscribers this year, there has been labor unrest in the entertainment industry, partially fueled by writers’ and actors’ grievances regarding inequitable compensation offered by video streaming platforms like Netflix. By utilizing a backlog of completed U.S. television series and films, as well as productions produced in international markets unaffected by the labor disputes, the organization has managed to endure the writers’ strike that was recently resolved and the subsequent strike by actors.
Netflix estimates spending around $17 billion on television series and films in the coming year, ostensibly to restore its library of original content once everyone returns to work.
Netflix’s Password-Sharing Crackdown Reels In Subscribers As It Raises Prices For Its Premium Plan.
As a result of Netflix’s decision to discontinue the practice of granting subscribers the ability to disclose their account passwords to individuals outside their residences, a greater number of viewers who had previously accessed the video service without charge have registered for their accounts. Additionally, the enforcement has benefited Netflix by permitting current subscribers to charge higher monthly fees for using their accounts by individuals residing outside their households.
Netflix co-CEO Greg Peters responded, “We are extremely pleased with how things have been going,” in response to a question regarding the password-sharing enforcement during a video conference call on Wednesday. He forecasted that the crackdown would result in additional subscriber gains for at least several more quarters as Netflix confronts an increasing number of “borrower households” regarding unauthorized viewing of the service’s content.
The evident triumph of the assault on password sharing may enable the administration to allocate resources towards alternative revenue-generating strategies, such as introducing an advertising-supported low-priced option a year ago.
The decision by them to allow commercials on its service has yet to be a significant success. However, Uday Cheruvu, an analyst at Harding Loevner, believes that this will change as advertisers realize that the personal information the company has gleaned from viewers’ entertainment preferences can be used to target commercials at consumers most likely to purchase their products, just as Google and Facebook have been doing for years. During the video conference call, Peters stated that Netflix is already collaborating with its advertising partner, Microsoft, to more precisely target its commercials.
“I believe Netflix’s advertising potential is undervalued,” stated Cheruvu. “The level of audience engagement with the video advertisements on that platform may be several times greater than that of a social media platform.”
In a letter to shareholders, Netflix stated that approximately 30% of its new subscribers are selecting the $7 plan with advertisements, a trend that is likely to increase advertiser spending. The increased cost of Netflix’s premium plans may discourage some users from switching to the ad-supported alternative.
“The era of’streamflation’ has arrived, and consumers can anticipate price increases, limits on password sharing, and ad-supported options,” said Scott Purdy, U.S. media leader for KPMG.
SOURCE – (AP)
