Netflix raises prices and adds subscribers despite strikes

LOS ANGELES, Oct 18 (Reuters) – Netflix ( NFLX.O ) raised subscription prices for some streaming programs in the United States, Britain and France on Wednesday as it beat expectations for new customers, sending its shares up 13%.

Nearly 9 million subscribers joined Netflix worldwide in the third quarter, beating Wall Street analysts’ forecast of 6 million, according to LSEG. Netflix said it expects a similar number of additions in the current quarter.

The strong performance showed that Netflix is ​​thriving despite Hollywood labor tensions that have halted much of US production. Netflix produces many of its shows and movies overseas, which accounts for the bulk of its new bookings.

Netflix pointed to the global success of “One Piece,” a live-action adaptation of the venerable Japanese manga series, as an example of its huge investment in stories with local resonance that travel around the world. The streaming giant has drawn new viewers to long-running TV shows such as the legal drama “Suits” licensed from Comcast ( CMCSA.O ) and HBO’s World War II series “Band of Brothers.”

“I’m thrilled that we have such a rich and deep and broad selection of programming,” Netflix co-CEO Ted Sarandos said after the release of quarterly results.

Hollywood’s film and television writers approved a new contract this month, but actors are on strike. Sarandos said Netflix is ​​”absolutely committed to ending this strike.”

The company’s third-quarter customer gains marked its strongest quarterly growth since the second quarter of 2020, when lockdowns early in the global pandemic led to an unprecedented surge in streaming subscriptions.

Netflix increased the US price of its premium ad-free plan by $3 to $22.99 per month. The price for the Premium increased by £2 to £17.99 in the UK and €2 to €19.99 in France.

Investors welcomed the news, with Netflix shares climbing to $390.80 in extended trading from near $346.19.

PP Vision analyst Paolo Pescador said Netflix’s third-quarter growth is a testament to its recent crackdown on password sharing and growth opportunities as it moves into advertising.

“It’s firing on all cylinders, and the latest efforts are all going 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 were made in Europe, the Middle East and Africa, where Netflix added nearly 4 million subscribers. More than 70% of its members now live outside the United States.

During the quarter, “Suits” became the most-watched title on TV bought on streaming in the U.S. for 12 weeks after beating Original TV and Netflix. The series, starring Prince Harry’s wife Meghan Markle, originally aired on the USA cable network from 2011 to 2019.

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

The company had revenue of $8.54 billion, according to analyst estimates. Earnings per share came in at $3.73, ahead of the $3.49 expected by Wall Street.

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

The writer and actor strikes prompted Netflix to revise content spending to $13 billion by 2023.

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

Netflix continued to dominate viewers. Netflix programming accounts for 8% of television screen time, second only to YouTube, the company said, citing Nielsen data.

Reported by Lisa Rich; Editing by Aurora Ellis, Bill Bergrod and Leslie Adler

Our Standards: Thomson Reuters Trust Principles.

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