Netflix (NFLX) earnings Q3 2023

LOS ANGELES — Netflix reported a boost in subscriber growth driven by a password-sharing crackdown efforts and interest in its new ad-supported tier.

The streaming giant said after the market closed Wednesday that it had added 8.76 million global subscribers during the third quarter, higher than 5.49 million Wall Street had expected, according to estimates from Street Account. It’s the biggest quarterly net add total for the company since it added 10.1 million subscribers in the second quarter of 2020 – when Covid restrictions kept people home.

Here are the results:

• Earnings: $3.73 vs $3.49 per share expected, according to LSEG, formerly known as Refinitiv
• Revenue: $8.54 billion vs $8.54 billion expected, according to LSEG
• Total memberships expected: 247.15 million vs. 243.88 million expected, according to Street Account

Netflix said that its ad plan membership grew nearly 70% quarter over quarter, although it did not disclose what percentage of its base is subscribed to this tier.

Revenue in the third quarter rose to $8.54 billion from $7.93 billion a year earlier. Net income came in at $1.68 billion, or $3.73 per share, compared with $1.4 billion, or $3.10 per share.

The results were the latest confirmation that Netflix rules the streaming world, as its would-be rivals scratch and claw to become profitable.

The company’s dominance shows in its pricing power. Netflix said it is keeping its ad tier pricing at at $6.99 a month in the U.S. while its basic and premium services will see a price hike starting Wednesday. Netflix’s basic plan will now cost $11.99 (up from $9.99) and premium will be $22.99 a month (up from $19.99). Netflix’s standard plan will remain at $15.49 a month.

The price increases come as the company seeks to improve its profitability and grapple with higher production costs.

Read more: Netflix is leaning more into sports programming

As part of its new deal with Hollywood’s writers, Netflix, alongside other members of the Alliance of Motion Picture and Television Producers, have agreed to higher wages and monetary benefits based on streaming popularity. The AMPTP has yet to finish negotiations with striking actors, but expectations are that costs for creating content will rise when a new contract is finalized.

“We spent hours and hours with SAG-AFTRA over the last few weeks and we were actually very optimistic that we were making progress,” said co-CEO Ted Sarandos during the company’s taped earnings comments Wednesday. “But then at the very end of our last session together the guild presented this new demand on top of everything of a per subscriber levy, unrelated to viewing or success, and this really broke our momentum unfortunately.”

Sarandos noted that Netflix and other members of the AMPTP remain committed to reaching an agreement with actors. It is unclear when negotiations will continue….