Netflix raises prices as it adds 9 million subscribers, shares rise

LOS ANGELES, Oct 18 (Reuters) – Netflix (NFLX.O) increased subscription prices for some of its streaming plans in the United States, Britain and France on Wednesday as it shattered new customer expectations, and its shares jumped 13%.

The company picked up almost 9 million subscribers around the globe, surpassing the 6 million expected by Wall Street analysts, according to LSEG. Netflix said it expected a similar number of additions in the current quarter.

The company credited the recent gains to its crackdown on password-sharing and a steady flow of new programming, such as the romance movie “Love at First Sight” and Japanese series “One Piece.”

The customer gains represented the strongest quarterly uptick since the second quarter of 2020, when lockdowns early in the global pandemic led to a surge in streaming subscriptions.

Netflix increased the U.S. price of its premium ad-free plan by $3 per month to $22.99. The cost for premium rose by 2 pounds to 17.99 pounds in Britain and by 2 Euros to 19.99 Euros in France.

Investors welcomed the news, sending Netflix shares climbing to $390.80 in extended trading from a close at $346.19.

The streaming video pioneer has been searching for ways to boost revenue as it nears market saturation in the United States and faces competition from Walt Disney (DIS.N), Warner Bros Discovery (WBD.O) and others.

PP Foresight analyst Paolo Pescatore said the third-quarter growth at Netflix was a testament to its password crackdown and the opportunities for future growth as it moves into advertising.

“It is firing on all cylinders, with recent efforts all heading in the right direction,” he said.

GLOBAL GAINS

The price hikes were announced in an earnings report that showed the company’s global subscriber base reached 247 million at the end of September.

Substantial subscriber gains came in Europe, the Middle East and Africa, where Netflix added nearly 4 million subscribers. More than 70% of its members now reside outside the United States.

Netflix touted the success of legal drama “Suits,” which ran on the USA cable network from 2011 to 2019. The series starring Prince Harry’s wife Meghan Markle broke viewing records when it debuted on Netflix this summer, becoming the most-watched title across film, original TV and acquired TV on streaming in the U.S. for 12 straight weeks.

“As the competitive environment evolves, we may have increased opportunities to license more hit titles to complement our original programming,” Netflix said in its quarterly letter to shareholders.

The company posted revenue of $8.54 billion, in line with analyst forecasts. Earnings came in at $3.73 per share, ahead of Wall Street’s expectation of $3.49.

Netflix’s forecast for fourth quarter revenue of $8.69 billion was slightly below analysts’ estimates of $8.77 billion.

Media companies like Netflix have been grappling with labor tensions in Hollywood. While film and television writers have ratified a new contract, actors remain on strike.

The work stoppages shut down Netflix productions such as “Stranger Things.”

The company argues, however, that it has navigated the strikes better than competitors because many of its productions take place outside the United States.

The strikes prompted Netflix to revise its projections on content spending to $13 billion in 2023, assuming the studios reach a settlement with striking actors “in the near future.”

That was down from the $17 billion it expected to spend.

Netflix said it continued to dominate viewership even with the strikes. Netflix programming accounted for 8% of television screen time, second only to YouTube, the company said, citing Nielsen data.

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