Having a hard time keeping up with everything Netflix is putting out? So is the company's budget.
Netflix on Monday celebrated its biggest gain ever in subscribers for this time of year, in a report detailing its finances for the third quarter. But on the heels of a price increase, the company vowed to keep revving up its output of original shows and movies, even as its bottom line wilted from all the heat.
Earlier this month, Netflix said it would be hiking prices for most subscribers. It bumped up its plan that allows two simultaneous streams by $1 to $12 a month, and is billing $2 more for its four-streams plan, now $14 a month. (Netflix's cheapest plan stays the same at $8.) New members faced the higher costs immediately and previous subscribers will see their bills rise over the next few months.
Because of the timing of the price increases, Monday's results don't directly reflect higher payments -- but they hint at Netflix's rationale for raising them.
The nagging need for price increases has loomed over the company for a long time: Netflix spends an eye-popping amount of money on its original shows and movies. It's already released more than 60 originals just in the latest period.
But that's not quite enough. In a letter to shareholders Monday, the company wrote that the higher revenue from the price bump will help it widen its slate of originals even more. The company is shaping up to spend $7 billion to $8 billion on programming during the next year, it said.
Right before the start of the third quarter, Netflix released the latest season of its perennially popular program "Orange Is the New Black." "Narcos" came out during the quarter itself. Coming up in the current, fourth period is the second season of its sci-fi megahit "Stranger Things," set to land in time for Halloween on Oct. 27. Also coming are the second season of its budget-busting British period drama "The Crown" and its most ambitious attempt at a blockbuster movie yet, "Bright," starring Will Smith.
In the US, Netflix added 850,000 US streaming customers, for a total of 52.77 million, beating its July guidance for 750,000 new members. Its international subscriber base jumped by 4.45 million members to 56.48 million, beating the 3.65 million additions the company had predicted.
Looking ahead, Netflix expects to add 1.25 million streaming members in the US and 5.05 million internationally in the current quarter.
Investors seemed moderately pleased with the results. Shares in after-hour trading rose 2.4 percent to $207.56
Overall, Netflix reported a profit of $130 million, or 29 cents a share, compared with $52 million, or 12 cents a share, a year earlier. Revenue rose 30 percent to $2.99 billion.
Analysts on average expected per-share profit of 32 cents and $2.97 billion revenue -- matching Netflix's guidance set in July.
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