Curbing shared passwords is working for Netflix. The leading streaming television group added 8.76 million new subscribers in the third quarter of the year, exceeding analysts’ expectations. The group now has a record of 247.15 million paying subscribers worldwide, 10.8% more than a year ago, also benefiting from the pull of the advertising-supported service. After the success of its measures, the group is now determined to undertake price increases. The first, announced this Wednesday in the presentation of results, will affect the United States, the United Kingdom and France.
Netflix achieved record revenues of 8,546 million dollars (about 8,110 million euros at the current exchange rate) in the third quarter of the year, 7.8% more than in the same period last year, according to figures published this Wednesday. Profit, for its part, grew by 20%, to 1,677 million dollars. The company has been able to improve margins and increase cash generation. Investors have rewarded such solid results with strong increases in the stock market (over 10%) outside of normal market hours.
The increase in subscribers is the largest since the second quarter of 2020, in the middle of the pandemic. After a couple of years of sluggish growth, the company adopted a dual growth strategy that coincided with a transition at the top of the company. On the one hand, put a stop to the use of shared accounts between different households that paid for a single subscription. On the other hand, lower the level of access with the launch of a service that includes advertising when playing the content. Both measures have worked and have allowed Netflix to stand out in a crowded market where several competitors are struggling. In the dozen markets in which it has launched the service with ads, 30% of new subscribers opt for it, as the company explained this Wednesday.
In places where it has prevented the use of shared passwords, the level of cancellations is low, exceeding the company’s expectations. In addition, many of the households that used those borrowed passwords are signing up. “As a result, our revenue is positive in all regions, taking into account derived accounts and additional members, attrition and plan mix changes. In the coming quarters, we will continue to refine and optimize our approach to convert more borrower households into full members or additional members,” the company assures. Netflix claimed that more than 100 million homes shared its service.
Subscriber loyalty makes the company feel strong enough to raise prices. “While in most cases we have paused price increases by introducing paid sharing, our overall approach remains the same: a range of prices and plans to meet a wide range of needs and, as We offer more value to our affiliates, from time to time we ask them to pay a little more,” says Netflix, which has decided to raise prices with immediate effect in the United States, the United Kingdom and France.
In the United States, the ad plans ($6.99) and standard ($15.49) remain the same, but the price of the basic plan rises to $11.99 and the premium, at 22.99. In the United Kingdom and France, the advertising and standard plans do not increase either (4.99 and 10.99 pounds in the United Kingdom and 5.99 and 13.49 euros in France), but they do increase the basic plan (to 7.99 pounds and 10.99 euros, respectively) and the premium (at 17.99 pounds and 19.99 euros). “Our starting price is extremely competitive with other streamers and, for example, at $6.99 per month in the United States, it is much less than the average price of a movie ticket,” defends Netflix.
In its letter to shareholders, Netflix also refers to the strikes that have affected the audiovisual production sector. “The last six months have been difficult for our industry due to the combined strikes of writers and actors in the United States. Although we have reached an agreement with the WGA [el sindicato de guionistas]negotiations with SAG-AFTRA [los actores]are in progress. “We are committed to resolving the remaining issues as soon as possible so everyone can get back to work making movies and TV shows that audiences will love,” he says.
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