Netflix has just released its third-quarter earnings. So far, so good for the streaming giant as the company added nearly 9 million subscribers globally, which would put the revenue up.
However, this also means that Netflix can raise the prices for some of its plans in the U.S., the U.K. and France to allow it to differentiate ad-free plans from its entry-level ad-supported plan. For instance, the most expensive one will now cost $22.99 per month to new subscribers.
But let's rewind first and see how Netflix is faring right now. Last month, Netflix began cracking down on password sharing in its home market and dozens of others around the world. In short, we're now finally getting a good view of the impact of password sharing as this third quarter represents the first full quarter since the rules took effect.
It had also simplified its product some months ago by getting rid of the entry-tier plan in the U.S. and the U.K. Subscribers now have to fork out a pretty penny if they want to rid themselves of the ads on Netflix.
While reports indicate that many customers are experiencing subscription fatigue and are considering canceling some of their streaming subscriptions, it seems that Netflix still has much room for growth — especially in terms of advertising revenue.
It currently enjoys 247.15 million subscribers. And that's a gain of 8.76 million subscribers in one quarter alone. That marks the first time since Q2 of 2020, that Netflix has seen subscribership growth of this magnitude. Q2 of 2020 was also known as the quarter of strict COVID lockdowns around the world.
As for income, the company has booked $8.5 billion this quarter, with $3.73 per share in earnings. Ads also contribute more to the bottom line since the number of subscribers on the ads plan is up almost 70% quarter-over-quarter. Practically one-third of all new subscribers start with an ads plan.
This is great news for investors, which means Netflix stock is trading 13.75% higher in pre-market trading at $393.79 per share. The problem is that subscribers aren't going to like this at all because it would translate into the company increasing the price of some of its plans yet again in three key markets. Here is the full breakdown.
United States:
Standard with ads: $6.99 a month-no change.
Basic: $11.99 a month ($9.99)
Standard: $15.49 a month
Premium (with 4K streaming): $22.99 a month ($19.99)
In the U.K.:
Standard with ads: £4.99 a month
Basic: $7.99 a month ($6.99)
Standard: $10.99 a month
Premium (with 4K streaming): $17.99 a month (£15.99)
In France:
Standard with ads: €5.99 a month
Basic (still available in France for now): €10.99 per month (up from €8.99)
Standard: €13.49 per month (no change)
Premium, with 4K streaming: €19.99 per month (up from €17.99)
New pricing will go into effect for new subscriptions today. The existing subscribers will get the price increase in their bill weeks from now