Netflix raised subscription prices for some streaming plans in the United States, Britain and France on Wednesday as it beat expectations for new subscribers, sending its shares up 13 percent.
Netflix added nearly 9 million subscribers worldwide in the third quarter, beating Wall Street analysts’ forecast of 6 million, according to LSEG. Netflix said it expects to grow by the same number in the current quarter.
The strong performance showed that Netflix was thriving despite Hollywood labor tensions that shut down a large portion of U.S. production. Netflix makes many of its shows and movies overseas, which accounts for a large portion of its new sign-ups.
Netflix pointed to the global success of “One Piece,” an example of its heavy investment in live-action adaptations of venerable Japanese manga series and stories with local resonance that travel the world. The streaming giant also attracted new audiences to long-running television shows, such as the legal drama “Suits,” which it licensed from Comcast, and HBO’s World War II series “Band of Brothers.”
“This is a time when I’m excited that we have such a rich and deep and wide programming selection,” Netflix co-CEO Ted Sarandos said after the release of quarterly results. “The same was true during COVID, when we were able to manage the slate through a long and unexpected production disruption.”
Hollywood’s film and television writers ratified a new contract this month, but the actors are on strike. Sarandos said Netflix is ”absolutely committed to ending this strike.”
The company’s third-quarter subscriber gains represented its strongest quarterly growth since the second quarter of 2020, when streaming subscriptions grew unprecedentedly due to lockdowns at the start of the global pandemic.
Netflix has increased the US price of its premium ad-free plan by $3 per month to $22.99. The price of Premium increased by 2 pounds to 17.99 pounds in the UK and 2 euros to 19.99 euros in France.
Investors welcomed the news, with Netflix shares rising to $390.80 from a close of $346.19.
PP Foresight analyst Paolo Pescatore said third-quarter growth at Netflix is a testament to its recent crackdown on password sharing and growth opportunities as it moves toward advertising.
“It’s firing on all cylinders, with recent efforts all going in the right direction,” he said.
The price hike was announced in an earnings report that said the company’s global subscriber base reached 247 million at the end of September.
Subscribers grew significantly in Europe, the Middle East and Africa, where Netflix added nearly 4 million subscribers. More than 70% of its members now live outside the United States.
During the quarter, “Suits,” the movie, became the most-watched title on original TV and won TV on streaming in the U.S. for 12 consecutive weeks after hitting Netflix. The series, which stars Prince Harry’s wife, Meghan Markle, originally aired on the USA cable network from 2011 to 2019.
“As the competitive environment evolves, we may have increased opportunities to license more hit titles,” Netflix said in its quarterly letter to shareholders.
The company posted revenue of $8.54 billion, according to analyst forecasts. Earnings came in at $3.73 per share, ahead of Wall Street expectations of $3.49.
Netflix’s fourth-quarter revenue forecast of $8.69 billion was slightly below analysts’ estimates of $8.77 billion.
The writer and actor strikes have prompted Netflix to revise its estimate of content spending to $13 billion in 2023, assuming studios will come to terms with star performers “in the near future.”
That was less than the $17 billion expected to be spent.
Netflix said it continued to dominate viewers. Netflix programming accounted for 8 percent of television screen time, second only to YouTube, the company said, citing Nielsen data.