Netflix reports positive earnings and subscriber growth amid dual Hollywood strikes

Netflix's crackdown on password sharing appears to be paying off — at least for now.

In a quarterly earnings report Wednesday, the streamer announced an uptick in both subscribers and revenue. Netflix reported adding 5.9 million subscribers to its global total of 238 million, as well as a 3 percent rise in revenue to $8.2 billion from the same period last year.

The company also cited a profit of $1.5 billion for the quarter and credited the increase to two factors: a recent measure to charge for password sharing and the introduction of an ad-supported subscription tier. While some observers had anticipated that the password-sharing crackdown might lead to an increase in canceled subscriptions, the company said that the "cancel reaction was low" and noted a "healthy conversion of borrower households into full paying Netflix memberships."

Netflix also announced Wednesday that it is no longer offering its $9.99 per month ad-free "basic" plan in the U.S. and Britain, leaving new consumers to choose between the $6.99 ad-supported plan or ad-free subscriptions that start at $15.49 per month.

The upbeat earnings report, however, comes at a moment of immense tension in the entertainment industry. Two major Hollywood unions, the Writers Guild of America and Screen Actors Guild - American Federation of Television and Radio Artists, are currently on strike, marking the first time they've concurrently walked out since 1960.

While both unions are striking over a multitude of issues, including the impact of artificial intelligence, the unique issues of the streaming landscape are at the heart of writers' and actors' grievances. As the Los Angeles Times recently reported, many union members have dubbed this "the Netflix strike."

Residuals, particularly as they pertain to streaming platforms, are a major point of contention, with actors and writers fighting for higher returns on streaming movies and series. Many union members maintain that they're not being fairly compensated in the streaming era, especially as so much of entertainment has pivoted to the format and network and cable residuals have dried up.

As one of the first major players in the streaming space, Netflix set a precedent for many current industry contracts and policies, which the unions are now pointing to as reasons why their profession has become financially unsustainable.

During Wednesday's earnings call, Netflix CEO Ted Sarandos addressed the strikes, which have virtually shut down Hollywood. "We very much hoped to reach an agreement by now," he said. "We need to get this strike to a conclusion so that we all can move forward."

The WGA and SAG-AFTRA, meanwhile, have said that the Alliance of Motion Pictures and Television Producers, which represents the interests of the studios, has not come back to the bargaining table or made any counter proposals since the strikes began, suggesting that there is not a swift conclusion in sight.

Other studios, including Disney and Warner Bros. Discovery, will report their quarterly earnings over the next few weeks.

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