On Wednesday, Netflix hiked its subscription rates for some of its streaming plans in some countries, including the US, France, and the UK. This led to shattered customer expectations, as the shares of Netflix soared by 10%.
In the last quarter, Netflix acquired almost 9 million new subscribers all over the world. It surpassed the consensus of Wall Street analysis by LSEG that predicted that Netflix would acquire 6 million. However, Netflix stated that the gains in the number of subscribers are due to its actions for the “Password-sharing crackdown,” which took place over the last few months.
According to the New York Post,
“The company raised the US price of the premium ad-free plan by $3 per month to $22.99. The one-stream basic plan rose by $2 per month. Investors welcomed the news, sending Netflix shares climbing more than 10% in after-hours trading to $382.99.”
Netflix’s market got saturated in the United States due to various competitions, especially the ones posed by Walt Disney, Discovery, and Warner Bros. Hence, Netflix has been continuously searching for ways to increase its revenues for quite a few months.
Paolo Pescatore, the analyst from PP Foresight, stated that Netflix’s growth in the third quarter is due to a testament to its crackdown on its password-sharing. This led to opportunities for future growth as Netflix moved more towards advertising.
As per the analysis from LSEG, the projected growth of Netflix in the fourth quarter was $8.77 billion. However, the actual growth fell slightly to $8.69 billion.
Furthermore, Netflix and other media companies are also grappling with various labor tensions in Hollywood. Despite ratifying a new contract, many actors remain on strike.