Netflix gains subscribers with ads and password crackdown

During the strike, Netflix said it was relying on productions ready for release and a large base of upcoming films and shows from around the world. — Reuters

SAN FRANCISCO: Netflix on Wednesday (Oct 18) said subscriber numbers grew nearly 11% to 247 million in the recently ended third quarter as it cracked down on password sharing and refined an ad-supported tier.

The leading streaming service said it is increasing the price of its basic plan in the United States to US$11.99 (RM57) monthly and its premium plan to US$22.99 (RM109), with similar price "adjustments" set for Britain and France.

"While we mostly paused price increases as we rolled out paid sharing... as we deliver more value to our members, we occasionally ask them to pay a bit more," Netflix said in the letter to shareholders.

Netflix shares leapt more than 12% to US$43.31 (RM206) in after-market trades on the Nasdaq exchange.

The streaming service said in an earnings report that its nascent ad-supported offering was gaining traction, with the number of users increasing nearly 70% over the quarter.

Netflix reported a profit of US$1.68bil (RM8bil) on revenue of US$8.5bil (RM40.51bil) in the quarter, beating market expectations with its earnings figures.

"All-in-all, management's working hard to squeeze every last drop of cash possible from the available subscriber base, but as that cup begins to run dry, it will be a lot more important to understand exactly how successful the next phase of growth can be," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

In May the Silicon Valley giant expanded its crackdown on users sharing passwords with people beyond their immediate family, as it seeks to shore up revenue.

To convert non-paying users, Netflix has introduced "borrower" or "shared" accounts, in which subscribers can add extra viewers for a higher price, or transfer viewing profiles to new accounts.

In a separate bid for revenue, Netflix launched an ad-subsidised offering around the same time as the crackdown and later eliminated its lowest priced ad-free plan.

The ad-supported tier, launched late last year, costs US$7 (RM33).

Actors strike

The earnings report came as Netflix and other film and television makers see productions halted by an actors strike in the United States.

"We are incredibly and totally committed to ending this strike," Netflix co-chief executive Ted Serandos said during an earnings presentation.

"The industry, our communities and the economy are all hurting so we need to get a deal done that respects all sides as soon as we possibly can."

Hollywood writers had also been on strike, but came to a tentative agreement with studios just weeks ago.

During the strike, Netflix said it was relying on productions ready for release and a large base of upcoming films and shows from around the world.

A Netflix adaptation of Japanese manga comic One Piece was watched more than 18 million times in its first four days, putting it at the top of the charts.

The story of Monkey D Luffy, a boy with a straw hat and stretchy superpowers determined to become king of all pirates by finding a treasure known as the One Piece has captivated manga fans since its first editions in 1997.

"We continue to focus on improving our slate, with best-in-class originals and licensed titles from around the world," Netflix told shareholders in the letter.

Netflix cited popular shows including One Piece, Class Act out of France, and Guns & Gulaabs from India. – AFP

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