Netflix’s password-sharing crackdown reels in subscribers as it raises prices for its premium plan

Netflix’s efforts to crack down on password sharing are yielding positive results, with the streaming giant revealing impressive subscriber gains during the summer that exceeded industry expectations. This move is converting freeloaders into paying customers and bolstering the company’s financial performance.

To further boost revenue, Netflix has announced a price increase for its premium plans. The most expensive streaming service will see a $2 rise to $23 per month in the U.S., representing a 10% increase. The ad-free streaming plan’s price will also increase by $2 to $12. The cost of Netflix’s most popular streaming option in the U.S. remains at $15.50 per month, while a $7 monthly plan with intermittent commercials remains unchanged. Similar price hikes have been implemented for subscribers in the U.K. and France.

These strategic moves have resulted in a substantial increase in worldwide subscribers during the July-September period, with Netflix adding nearly 8.8 million subscribers. This figure is more than triple the number gained during the same period the previous year. As a result, Netflix now boasts approximately 247 million worldwide subscribers, surpassing the 243.8 million projected by analysts.

In terms of financial performance, Netflix exceeded analyst forecasts, reporting earnings of $1.68 billion, or $3.73 per share, marking a 20% increase from the previous year. Revenue also saw an 8% increase, reaching $8.54 billion. These impressive figures led to a more than 12% surge in Netflix’s stock price in extended trading.

Netflix’s success this year is noteworthy, with over 16 million subscribers added in the first nine months alone, surpassing the total number added in the entire previous year. However, it falls short of the exceptional 36 million additional subscribers gained in 2020, when the pandemic led to a surge in demand for streaming services.

Despite recent labor disputes in the entertainment industry, including writers’ and actors’ strikes related to compensation issues, Netflix has navigated these challenges by relying on its backlog of completed TV series and movies, as well as productions from international markets unaffected by the disputes. In a bid to rebuild its library of original programming, Netflix plans to invest approximately $17 billion in TV series and films next year.

One notable factor contributing to Netflix’s subscriber growth has been its decision to crack down on password sharing, abandoning its previous practice of allowing subscribers to share their account passwords with friends and family outside their households. This move has prompted viewers who were accessing the service for free to sign up for their own accounts. Moreover, current subscribers have the option to share their accounts with individuals outside their households by paying higher monthly fees. Netflix’s co-CEO, Greg Peters, expressed satisfaction with the progress of this crackdown, anticipating continued subscriber gains over the coming quarters.

Netflix’s exploration of new revenue streams includes a low-priced option with advertising, introduced a year ago. While the impact of this change hasn’t been substantial yet, analysts believe it has the potential to grow as advertisers recognize the value of Netflix’s access to viewers’ entertainment preferences for targeted advertising. Netflix is collaborating with its advertising partner, Microsoft, to enhance the precision of ad targeting.

In conclusion, Netflix’s proactive measures to address password sharing and implement price adjustments have contributed to its continued success in the highly competitive streaming landscape, positioning the company for sustained growth in the future.

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More about Netflix subscription growth

• Netflix’s Subscriber Gains
• Netflix Price Increases
• Netflix Financial Performance
• Netflix’s Stock Performance
• Netflix’s Approach to Password Sharing
• Netflix’s Advertising Potential
• Netflix’s Future Revenue and Subscriber Expectations