Netflix gained nine million subscribers in the third quarter and saw a year-over-year increase in revenue despite strikes by Hollywood writers and actors that brought the entertainment industry largely to a standstill.
Netflix’s revenue reached $8.5 billion in the quarter, the streaming company announced in an earnings report on Wednesday, up 8 percent from the same period last year. The increase was attributed to better-than-expected subscriber growth. Netflix now has 247 million subscribers worldwide. The company’s net income was $1.6 billion, up almost 20 percent from the third quarter in 2022. Due to the writers’ strike, which recently ended, and the ongoing actors’ strike, the company is expected to spend around $13 billion on content this year, down from $17 billion.
Netflix also announced that it would raise the monthly subscription price for its premium ad-free service in the United States from $19.99 to $22.99. Prices will also be raised in the United Kingdom and France.
The premium service allows usage on four devices simultaneously. The monthly price for the standard ad-free service, which can be used on two devices at once, will remain at $15.49.
According to analysts, the increase can be attributed to Netflix’s efforts to attract more people to its less expensive service ($6.99 a month) that includes advertisements, generating additional revenue.
“Yes, raising prices will boost revenue for streaming services in the short term, but it is not sustainable in the long run, as consumers expect value: great content at a fair price,” wrote Mike Proulx, a vice president and research director at Forrester Research.
Despite the overall contraction of the television business due to rising production costs and a soft ad market, Netflix may find itself in a strong competitive position. The original series “One Piece” and “Suits” were both successful in the United States and Japan.
“We may have increased opportunities to license more hit titles to complement our original programming,” the company said in a letter to shareholders. It is a practice that benefits “our members, as well as rights holders,” the company said.
Netflix expects a decline in net income in the fourth quarter due to increased marketing costs associated with the release of more movies and series, including the final season of “The Crown” and Zack Snyder’s big-budget sci-fi fantasy “Rebel Moon.”
Netflix reported that its ad-tier memberships increased by almost 70 percent. It also stated that 30 percent of new subscriptions in the 12 countries where the ad tier was available were for the less expensive option. The company also claimed success in its efforts to combat password sharing.
The company recently made cuts in its animation department and terminated two animation films in pre-production, as reported by Variety. It has now been revealed that Netflix has entered into a multi-year agreement with Skydance Animation, currently under the leadership of former Pixar chief John Lasseter. Skydance, previously associated with Apple, will now develop and produce animated movies exclusively for Netflix beginning in 2024.
