Netflix announced a modification in the pricing of multiple subscription tiers in various countries at the same time it published its quarterly earnings report today, which showcased that the company added more than 9 million subscribers in the past three months.
In the United States, the Los Gatos-based video streaming giant will now charge $11.99 per month for the Basic package – a subscription tier that is no longer available to new users – while the Premium package, which supports 4K streaming, will now cost $22.99 per month – a $3 increase.
Meanwhile, users within the United Kingdom will be charged £1 more or £7.99 for the Basic package, which is also no longer available in this country, and £2 more for the premium tier, making it stand at £17.99.
Finally, in France, the cost of the Basic package will be bumped to €10.99 – a €2 increase – and the same goes for the Premium tier, which will now cost €19.99 – also a €2 hike.
These price hikes are effective immediately and both new and existing users in these countries will now pay a higher subscription for accessing the referred tiers. Netflix (NFLX) is the latest streaming platform to adjust its pricing, with others like Disney+ and HBO Max taking this step in prior months in response to persistent inflationary pressures across the developed world.
Sports-Related Content Is a Huge Success Among Netflix Users
In a letter addressing its shareholders, Netflix shared some interesting business updates including insights into how its recently adopted ad-supported tier has been working, and user subscription data. It also discussed how the business has been affected by the recent strike organized by writers and actors pushing for better wages and fighting to keep AI from taking their jobs.
According to the management team, the number of subscribers who opted to enroll for the ad-supported tier has been growing rapidly, increasing by 70% during the third quarter of the year compared to the previous three months. In addition, Netflix informed that almost 30% of the sign-ups registered in countries where the ad-supported plan is available opted for this tier.
The company said that nearly three-quarters of its members are now based outside of the United States. The platform’s sports-related content appears to be turning into an increasingly successful category with shows like Break Point (tennis), Beckham (soccer), and the new season of Formula 1: Drive to Survive reportedly attracting millions of viewers.
“The Netflix effect on Formula 1 is well understood and we saw how our Tour de France docuseries drove conversation around cycling, while the week following the launch of Beckham, David Beckham’s long established, huge social media following grew by over one million followers”, the company highlighted.
Some upcoming blockbusters for the streaming giant include the last season of its successful series The Crown, a new season of Money Heist, and several movies starring top actors and actresses including Chris Evans, Julia Roberts, and Emily Blunt.
The company acknowledged the challenges that it has been facing lately due to the SAG-AFTRA and WGA strikes. In regard to the latter, they commented that they have reached an agreement with the syndicate. Meanwhile, the firm confirmed that negotiations with SAG-AFTRA are still “ongoing”.
Netflix Stock Experiences Big Boost in Pre-Market Trading Activity
Shareholders are reacting positively to Netflix’s financials during this third quarter as shares are climbing nearly 15% in the premarket stock trading session this morning. Analysts believe that a combination of better-than-expected subscriber growth and price hikes are fueling today’s rally.
During the last three months ending in September, Netflix added 8.8 million subscribers to its platform compared to the 2.4 million they managed to bring in during the same period a year ago. The company ended the quarter, with over 247 million paid subscribers worldwide – a 10.8% year-on-year bump.
In regard to the future, Netflix reaffirmed its commitment to keep cracking down on password sharing as cancellations continue to be minimal. “The cancel reaction continues to be low, exceeding our expectations, and borrower households converting into full paying memberships are demonstrating healthy retention”, the management team asserted.
The firm, however, acknowledged that ad revenues will still be comparatively immaterial to the financial performance of the business for what remains of 2023.