Netflix Returns to Growth Mode

Netflix said its efforts to limit password sharing delivered stronger customer growth than expected in the third quarter, and it announced plans to increase some prices in the U.S., U.K. and France.

The Wall Street Journsld reports shares rose more than 12% in after-hours trading. The streaming giant added 8.8 million subscribers in the third quarter with customer growth in every region, after attracting 2.4 million net new subscribers during the same period a year earlier.

The company plans to immediately raise prices for its basic plan in the U.S., which is no longer available to new customers, to $11.99 from $9.99 and up the cost of its premium plan to $22.99 from $19.99. It is also increasing some prices in the U.K. and France, though the cost of its ad-supported and standard ad-free plans are unchanged.

The price increases are a sign of streamers’ efforts to improve profitability and wean consumers off the low monthly subscription fees that drew users away from pricey cable bundles in the early days of streaming.

Netflix said in its third-quarter earnings report that its average revenue per member decreased 1% year-over-year as a result of limited price increases over the past 18 months, a higher percentage of its growth coming from countries where it charges less for plans, and changes to its mix of its subscriptions. 

 Netflix has fared better than many of its rivals this year, with companies like Disney and Warner Bros. Discovery grappling with ailing legacy cable businesses and costly transitions to streaming on top of strikes that disrupted their production schedules.

The company ended the quarter with 247.15 million paid subscribers, up 10.8% from a year earlier.

Net profit rose 20% to $1.68 billion in the third quarter, topping its forecast. The company’s operating margin during the period was 22.4%, slightly higher than its forecast.