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Netflix’s Summer Surge: Cracks Down on Password Sharing, Rakes in Record Subscribers

Netflix says 30% of incoming subscribers opt for the $7 plan with commercials

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Aditya Saikrishna
Aditya Saikrishna
I am 21 years old and an avid Motorsports enthusiast.

UNITED STATES: Netflix, the global streaming giant, has reported a remarkable surge in subscribers during the summer months, outpacing industry expectations. This surge, seen as a result of the company’s efforts to curb password sharing, has successfully converted freeloaders into paying customers.

In a bid to further boost revenue, Netflix has announced an increase in the pricing of its premium services. The highest-tier streaming plan will see a $2 hike to $23 per month in the U.S., marking a 10% increase.

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Additionally, the lowest-priced ad-free plan will be raised by $2 to $12. The $15.50 per month cost for the most popular U.S. streaming option will remain unchanged, as will the $7 monthly plan, which includes intermittent commercials. Similar price adjustments have been made for subscribers in the U.K. and France.

During the July–September period, the company added a staggering 8.8 million subscribers globally, more than triple the number gained in the same period last year. This boost has propelled Netflix to approximately 247 million subscribers worldwide, surpassing the projected 243.8 million by analysts.

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Financially, Netflix has exceeded analyst forecasts, with earnings of $1.68 billion, or $3.73 per share, reflecting a 20% increase from the previous year. Revenue also saw an 8% climb to $8.54 billion.

In response to these impressive quarterly results, Netflix’s stock price surged by over 12% in extended trading. The company’s shares have experienced a 30% increase this year, showcasing its resilience in a competitive streaming landscape.

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Despite ongoing labour disputes in the entertainment industry, Netflix’s subscriber base has grown by over 16 million in the first nine months of the year, surpassing the 8.9 million added in the entirety of the previous year. This expansion comes despite challenges faced due to the pandemic.

Netflix’s decision to clamp down on password sharing has proven highly effective in converting viewers into paying subscribers. Co-CEO Greg Peters expressed satisfaction with this strategy, anticipating continued gains in the coming quarters. Looking ahead, Netflix plans to invest approximately $17 billion in TV series and films next year, aiming to rebuild its library of original programming.

Additionally, the introduction of a low-priced option with advertising initiated a year ago is expected to play a significant role in revenue generation. Analysts suggest that the personalized data gathered from viewers’ preferences will allow for precise targeting of commercials, potentially rivalling advertising giants like Google and Facebook.

With approximately 30% of new subscribers opting for the $7 plan with commercials, Netflix is poised to attract more advertisers. The increased prices for premium plans may also redirect subscribers towards the ad-supported option.

Scott Purdy, U.S. media leader for KPMG, noted, “The ‘streamflation’ era is upon us, and consumers should expect to be hit with price hikes, password sharing limits, and enticed with ad-supported options.”

Also Read: Price Hikes Loom Over Netflix, Disney Streaming Services: A Call for Smart Subscriptions

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