Netflix said its efforts to limit password sharing delivered stronger customer growth than expected in the third quarter, and it announced plans to increase some prices in the U.S., U.K., and France, The Wall Street Journal reported.
According to The Wall Street Journal, shares rose more than 12% in after-hours trading. The streaming giant added 8.8 million subscribers in the third quarter with customer growth in every region, after attracting 2.4 million net new subscribers during the same period a year earlier.
The company plans to immediately raise prices for its basic plan in the U.S., which is no longer available to new customers, to $11.99 from $9.99 and up the cost of its premium plan to $22.99 from $19.99. It is also increasing some prices in the U.K. and France, though the cost of its ad-supported and standard ad-free plans are unchanged.
The price increases are a sign of streamers’ efforts to improve profitability and wean consumers off the low monthly subscription fees that drew users away from pricey cable bundles in the early days of streaming.
While Netflix’s password-sharing crackdown may not be popular with consumers, it’s seemingly having the intended effect for the company’s bottom line, IGN reported.
Netflix revealed its third-quarter earnings today, announcing that it added 8.8 million new subscribers last quarter, marking its best quarterly subscriber growth in more than three years. For comparison, it added 2.4 million subscribers during the same period last year.
According to IGN, in the U.S., the price of the basic plan – the lowest-cost tier without ads – which is no longer available to new subscribers – will jump from $9.99 to $11.99. The premium plan, which allows users to watch in Ultra HD across four supported devices at a time, will go from $19.99 to $22.99.
In the U.K., the basic plan will jump up from £6.99 to £7.99, while the premium plan will go from £15.99 to £17.99. In France, the price will increase to 10.99€ for the basic plan and 19.99€ for the premium plan.
Gizmodo has the snarkiest headline regarding Netflix: “Things Are Going Great at Netflix, So It’s Raising Prices”.
Looks like that password sharing crackdown worked: Netflix has reported adding nearly nine million new customers this quarter, bringing its total number of subscribers to 247.2 million as of September 30. Some customers, however, will find their plans are about to go up in price, Gizmodo reported.
According to Gizmodo, today’s letter to shareholders praised both Netflix’s original titles and its licensed content, calling out shows that did big numbers in Q3 like One Piece, The Witcher, Love at First Sight, and Suits. It noted that the ad plan has continued to rise in popularity, and that “our $6.99 per month ads plan in the U.S. continues to support our ads plan growth.” The streamer also touted this plan in particular as “much less than the average price of a single movie ticket.”
Personally, I think raising the price of Netflix subscriptions is going to cause Netflix to lose customers. Nobody likes to be hit with unexpected, increased, fees that they cannot easily opt-out of. If Netflix was smart, it would realize that increasing the cost of their service is going to push a lot of people away from Netflix.