Netflix has reported a surge in Q3 subscriber numbers of nearly 9 million and announced it will be raising prices in the US, UK, and France.
The online video streaming service said its Basic and Premium plans will now cost $11.99 and $22.99 per month, respectively, in the US, marking a rise from $9.99 and $19.99 price points.
Revenue slightly beat the company's guidance of $8.52bn hitting $8.54 billion in the quarter, an increase of nearly 8% compared to the same period last year, as the company increased its crackdown on password sharing, which rolled out in the US in late May, along with its ad-supported offering.
Netflix subscribers grew by 8.76 million in the third quarter of 2023, totaling 247.15 million on 30 September 2023
Netflix said in a letter to shareholders accompanying the Q3 results on Wednesday: “Adoption of our ads plan continues to grow – with ads plan memberships up almost 70% quarter-over-quarter – and on average, 30% of sign ups in our ads countries are to our ads plan, with more work to do to scale this business.”
The company says its $6.99-per-month ad-supported plan “continues to support our ads plan growth” in the US.
“Do what traditional TV has never been able to do… deliver relevant ads to reach audiences at scale.”
Edmund Mullins, Director, Inventory & Partnerships (EMEA) for StackAdapt said: “While we recognise that this growth is partly down to the recent password-sharing crackdown, the success is also hugely influenced by the increase of ad-based subscribers, which has doubled to over 10 million active users.
“For advertisers, this shift is pivotal. The continued growth of the ad-tiered model across streaming platforms, as well as adoption globally with the likes of Disney+, demonstrates that consumers are increasingly open to viewing ads in exchange for quality content. What’s more, total revenue per user is higher on the ad-supported plan, emphasising the potential profitability of this model. These factors are likely to incentivise streaming services to expand these options. Making it an attractive environment for brand promotion due to the ability to aggregate vast audiences and offer personalised ad experiences.
“As advertisers vie for consumers' attention in this evolving landscape, there’s an opportunity like never before, which is to do what traditional TV has never been able to do and that is to deliver relevant ads to reach audiences at scale. Allowing brands to establish meaningful connections and resonate with their target audiences for more impactful results.”
“Consumers will be very cost-conscious this holiday season”
A recent survey conducted by Recurly revealed that 46% of UK subscribers were saving significant amounts, ranging from £11 to £50 per month through password sharing.
Commenting on the Netflix results in relation to password sharing, Oscar Wall, General Manager, EMEA at Recurly, added: “The latest financial results are setting the standards for streaming services. Despite the crackdown on password sharing, results are positive, highlighting the appetite for content. However, for consistency, they’ll need to constantly add value, particularly with the upcoming price increases.
“We anticipate that consumers will be very cost-conscious this holiday season. Streaming platforms will need to offer personalised services, including variable payment models, while offering additional services, such as live sports and in-app gaming, to keep users engaged while they wait for new content.
“Combining this, along with a good customer experience, seamless payment mechanics and even ease of cancellation will leave a positive lasting impression to reduce churn and boost customer loyalty in the long-term.”