Netflix added nine million subscribers in the third quarter and saw year-over-year revenue growth despite the Hollywood writers and actors strike that largely brought the entertainment industry to a standstill.
Netflix’s revenue in the quarter reached $8.5 billion, up 8 percent from the same period last year, the streaming company said in an earnings announcement Wednesday. The increase was attributed to better-than-expected growth in customers. It now has 247 million customers worldwide. The company’s net income was $1.6 billion, up nearly 20 percent from the third quarter of 2022. The company expects to spend about $13 billion on content this year, down from $17 billion due to the recently concluded writers’ strike. And the ongoing actors’ strike.
Netflix also said it was raising the monthly subscription price for its premium ad-free service in the United States from $19.99 to $22.99. This will also increase prices in the United Kingdom and France.
The premium service can be used on four devices at a time. The monthly price for the standard ad-free service, which can be used on two devices simultaneously, will remain $15.49.
Analysts attributed the growth to an effort by Netflix to lure more people to its less expensive service ($6.99 per month), which also includes advertising, which generates additional revenue.
“Yes, raising prices will increase revenue for streaming services in the short term, but excessive use of this marketing lever is not sustainable, because consumers expect value: great content at a reasonable price,” said Mike, vice president and research director of Forrester. Proulx Research, wrote in a report. “The recent and planned price increases are not only not providing consumers with any added value, they are, arguably, getting less value.”
Nevertheless, with the overall television business declining due to rising production costs and a soft advertising market, Netflix may find itself in a stronger competitive position. For example, the original series “One Piece”, which was an adaptation of the best-selling manga series, was successful in the United States and Japan. And the service had another hit in “Suits,” which originally aired on USA Network before ending four years ago.
“We may have increased opportunities to license more hit titles to complement our original programming,” the company said in a letter to shareholders. It’s a practice that benefits “our members as well as rights holders,” the company said, referring to the “new life that success on Netflix brings.”
Netflix said it expects net income to decline in the fourth quarter due to increased marketing costs associated with more movies and series being released, including the final season of “The Crown” and Zack Snyder’s big-budget sci-fi. Also includes the fantasy “Rebel Moon”. ,
Netflix said its ad-tier subscriptions have increased by nearly 70 percent. Additionally, it said that in the 12 countries where the ad tier was available, 30 percent of its new subscriptions were for the less expensive option. It also said it was having success in its efforts to combat password sharing.
The company recently began making cuts to its animation department and discontinued two animation films in preproduction, According to a report by Variety, Now it’s clear why: The company announced Wednesday that it has a multiyear deal with Skydance Animation, which is currently run by former Pixar chief John Lasseter. Skydance, formerly at Apple, will now develop and produce animated films directly for Netflix starting in 2024.