Netflix announced its latest financial numbers for the third quarter of 2023 (in PDF format). At the same time, it also announced prices will be going up for its Basic and Premium plans immediately in some markets.
Starting today, the Basic Netflix plan, which has no ads and supports 720p resolution for streaming, will go up from $9.99 a month to $11.99 a month in the US, with similar price jumps for that plan in the UK and France.
The Premium plan, which supports 4K resolution streaming, is going up from $19.99 a month to $22.99 a month in the US, again with similar price hikes in the UK and France. The prices for the Basics with Ads plan ($6.99 a month) and the Standard plan ($15.49 a month) remain unchanged.
Netflix tried to rationalize the price hikes for these plans, stating:
Our starting price is extremely competitive with other streamers and at $6.99 per month in the US, for example, it’s much less than the average price of a single movie ticket.
Netflix also announced it added 8.76 million subscribers in the last three months, bringing its total worldwide subscriber numbers up to 247.15 million.
The streamer"s revenue for the quarter was $8.542 billion, up from $7.926 billion in the same period a year ago. Net income was $1.677 billion, up from $1.398 billion from a year ago. The excellent financial numbers caused Netflix"s stock to go up over 12 percent in after-hours trading.
One of the big reasons for the large subscriber growth is Netflix"s cheaper $6.99 a month ad-based plan which launched in December 2022. The company stated:
Adoption of our ads plan continues to grow — with ads plan membership up almost 70% quarter-over-quarter — and 30% of sign ups in our ads countries are, on average, to our ads plan, with more work to do to scale this business. Our $6.99 per month ads plan in the US continues to support our ads plan growth.
The crackdown on password sharing also seems to have helped Netflix:
The cancel reaction continues to be low, exceeding our expectations, and borrower households converting into full paying memberships are demonstrating healthy retention. As a result, we’re revenue positive in every region when accounting for additional spin off accounts and extra members, churn and changes to our plan mix.
However, it remains to be seen how Netflix subscribers will react to this new price increase in the Basic and Premium plans.