Surging earnings in the third quarter from Netflix reflect the success of its crackdown efforts on password-sharing as subscriptions rose to an all-time high excluding during the Covid-19 pandemic that people had to stay home under a lockdown measure.
Netflix added 8.76 million global subscribers during the third quarter, much higher than 5.49 million expected by Wall Street. This is the biggest quarterly net add in subscribers since the second quarter of 2020 that added 10.1 million during the pandemic.
Earnings per share of the streaming giant came in at $3.73 vs $3.49 per share expected by LSEG, formerly known as Refinitiv. Revenue was in line with expectations at $8.54 billion baht. Meanwhile, its total memberships that was reported at 247.15 million also beat expectations for 243.88 million. In addition, revenue in the third quarter showed nearly 8% growth year-on-year, while net income rose 13% to $1,680 million.
Netflix started its crackdown on password-sharing in late May this year with new subscription packages that allow the main account to add an extra account who is not in the same household with an extra charge.
The company wrote in its statement that came along with the earnings results that cancel reaction continues to be low, exceeding its expectations, and borrower households converting into full paying memberships are demonstrating healthy retention. As a result, Netflix is revenue positive in every region when accounting for additional spin off accounts and extra members, churn and changes to its plan mix.
After the earnings report, Netflix announced that it will increase pricing of some existing packages. This came in as the company seeks to improve profitability to tackle higher production costs, especially on the script writing.
Netflix and other TV producers recently agreed to increase wages and other benefits based on streaming popularity to Hollywood’s writers that were on a strike for months, claiming that they receive low benefits and concern about job security that could be replaced with artificial intelligence.
The new pricing strategy showed that Netflix will keep its standard ad-supported service at $6.99 a month in the U.S. while the basic and premium packages will see their price increased to $11.99 (up from $9.99) and $22.99 a month (up from $19.99), respectively. Its standard package will also stay at $15.49 a month.