The Netflix Password-Sharing Strike: Netflix’s High-Energy Streaming Revenue Has Overtaken Wall Street Forecasts

The analyst forecasts that shape investor expectations also topped the financial performance ofNetflix. The company earned $1.68 billion, or $3.73 per share, a 20% increase from the same time last year.

Earlier this month, The Wall Street Journal reported the streamer would raise the cost of its subscription a “few months” after the Hollywood actors strike ends, and now it’s happened even though the actors are still striking. The Writers Guild of America ended its strike last month after reaching an agreement with the likes of Netflix and other streaming services.

The video streaming service revealed summertime subscriber gains that exceeded industry analysts’ projections, signaling that the service’s crackdown on password sharing is converting former freeloaders into paying customers.

“We are incredibly pleased with how it has been going,” Netflix co-CEO Greg Peters said when asked about the password-sharing crackdown during a Wednesday video conference call. He predicted more subscriber gains will accrue from the crackdown for at least several more quarters as Netflix confronts more “borrower households” about watching the service’s programming without paying for it.

The company’s stock price soared more than 12% in extended trading after the latest quarterly numbers came out. Netflix shares have increased by about 30% so far this year amid mounting evidence its video streaming service is faring better than most in a crowded fielded of competitors that is testing the financial limits of many households.

In an apparent effort to rebuild its library of original programming that was ruined after everyone returned to work,Netflix said it expects to spend about $17 billion on TV and films next year.

How is Netflix influencing video advertising? The impact of password-sharing crackdown on viewers’ perceptions of the’streamflation’ era

The apparent success of the password-sharing crackdown could now free management to focus on other ways to bring in more revenue, such as a low-priced option that includes advertising introduced a year ago.

“I think the advertising potential of Netflix is underappreciated,” Cheruvu said. “The audience engagement with the video advertising there could be multiple times stronger than a social media platform.”

“The’streamflation’ era is upon us and consumers should expect to see price hikes, password sharing limits and more ad supported options,” said Scott Purdy, US media leader for KPMG.