Technology
Thursday, October 19th, 2023 1:46 pm EDT
Key Points
- Subscriber Growth and Financial Performance: Netflix reported a significant boost in subscriber growth, adding 8.76 million global subscribers during the quarter, exceeding Wall Street’s expectations. The company’s earnings per share ($3.73) also exceeded expectations, and its revenue ($8.54 billion) met expectations. Additionally, Netflix’s total expected memberships rose to 247.15 million, indicating its continued dominance in the streaming industry.
- Pricing Changes: Netflix is maintaining its ad-supported tier pricing at $6.99 a month in the U.S., but it is increasing the prices for its basic and premium services. The basic plan will cost $11.99 (up from $9.99), and the premium plan will be $22.99 a month (up from $19.99). These price increases are aimed at improving the company’s profitability and addressing higher production costs.
- Labor Negotiations: Netflix has been negotiating with Hollywood’s writers and is part of the Alliance of Motion Picture and Television Producers (AMPTP). They have agreed to higher wages and monetary benefits based on streaming popularity. However, negotiations with striking actors have stalled, with a new demand for a per-subscriber levy unrelated to viewing or success. Netflix remains committed to reaching an agreement with the actors, although it’s unclear when negotiations will continue. This situation could lead to increased costs for creating content.
Netflix reported a substantial boost in subscriber growth, with a net addition of 8.76 million global subscribers during the quarter, surpassing Wall Street’s estimates and marking the largest quarterly increase since Q2 2020. The surge in subscribers was attributed to efforts to crack down on password sharing and the interest in its new ad-supported tier. The ad plan membership also grew nearly 70% quarter-over-quarter, although the exact percentage of its user base on this tier was not disclosed. Despite the pricing increase for its basic and premium services, Netflix is maintaining its ad tier pricing at $6.99 a month in the U.S. The company also expects its full-year 2023 operating margin to be around 20%, at the high end of its previous forecast range, and foresees operating margins of 22% to 23% for full-year 2024. Additionally, Netflix intends to make substantial changes to its executive compensation model in 2024.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/10/18/netflix-nflx-earnings-q3-2023.html
