After successfully hooking Americans on hit series like Squid Game, the hugely profitable media giant is going to hike prices on its customers—and Wall Street is loving it.

Shares in the company are expected to surge 15% when trading opens, thanks to news that subscribers grew by a record 18.9 million in the past quarter. That’s more than Netflix gained in the three months that followed COVID, when everyone was suddenly forced to stay indoors. 

With new seasons of its hits Stranger Things and Wednesday just around the corner, the company said on Tuesday it will be hiking U.S. prices for the first time since October 2023.

All three services will see an increase, from $1 more per month for its ad-supported tier up to $2.50 for the standard subscription, which will now cost $17.99 a month.

Netflix sees ‘long runway’ for further growth by poaching TV audiences

Unlike streaming rivals that have struggled to earn a return, Netflix remains highly profitable: Annual operating income soared 27%, eclipsing the $10 billion mark for the first time ever.

“They’re leaving the rest of the industry in the dust,” LightShed Partners analyst Richard Greenfield told CNBC on Tuesday.

Despite its already existing dominance over other direct-to-consumer digital platforms with 300 million paying subscribers at the end of last year, Netflix argued it wasn’t nearly finished and had only just started to tap into the total addressable market.

“We account for less than 10% of TV viewing in every country in which we operate, all of which suggests a long runway for growth as streaming continues to expand around the world,” the company said in a statement after market close. It added that it aimed to be consumers’ first choice for entertainment.

Last time subscription growth will be reported every quarter

So far it seems to be living up to that claim. Both the second season of the hyperviolent Korean-language series Squid Game as well as the Netflix original thriller Carry-On with Jason Bateman and Taron Egerton drew in over 160 million views each. Meanwhile it claimed the Jake Paul–Mike Tyson boxing match was the most streamed sports event in history. 

As a result, paid net subscribers surged by 18.9 million in the fourth quarter, evenly spread across all four regions: North America, Latin America, Europe, and Asia Pacific. This is up from 13.1 million in the previous year’s period and just 5.1 million in the third quarter.

That will, however, be the last time it reports these figures. Moving forward it will only report subscriber growth on a milestone basis. Rather than focusing on subs, Netflix instead aims to emphasize engagement, such as viewing hours per member among owner households.

It argues these metrics better capture customer satisfaction, particularly after it began cracking down on password sharing. The effects of the latter on driving growth have been petering out, leading some analysts to correctly predict a price hike was around the corner.

Laser-focused on keeping viewers hooked

Although the term “streaming wars” is often bandied about, that is only applicable with regard to the arms race in money shelled out for content. When it comes to actual profitable growth, Netflix has no competitors. 

And there’s little reason to expect this to change, according to LightShed’s Greenfield, as rivals like Disney, Warner Bros. Discovery, and Paramount all rein in content spending. 

Greenfield argued that by trying to prove to shareholders their direct-to-consumer offers can be consistently profitable quarter after quarter, they’re committing a strategic mistake. Only names like Netflix, Amazon, and Apple truly comprehend what’s needed to compete over the long term.

“All of these [tech] companies are laser-focused on one thing: time spent. They don’t want us ever leaving,” he told CNBC. “They want to keep giving us more to do, more ways to spend time on their platforms. That is not what you’re seeing out of a lot of the traditional media companies.”