24 January 2024 , 15:46
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Netflix celebrated its best-ever festive season, with a gain of 13 million international subscribers in quarter four, as it wrapped up a strong year that included tackling account sharing and numerous price increases.
With the announcement of the impressive quarterly results on Tuesday, Netflix affirmed its successful strategy in attracting more subscribers despite the rising costs to enjoy its medley of TV shows and films. In a further attempt to justify the higher subscription fees, and possibly entice more viewers to a budget-friendly plan featuring commercials, Netflix announced a £5 billion deal on Tuesday.
This deal will bring the much-loved wrestling show, WWE's "Raw," onto their platform. The weekly programme, scheduled to join Netflix next year, will add to a feast of shows that boasts of the Emmy-award winning dark comedy, "Beef", and the Oscar nominee, "Maestro." Netflix, based in Los Gatos, California, gained 13.1 million worldwide subscribers during the last quarter of the year, smashing analyst predictions, according to FactSet Research.
This was their biggest ever increase for this period, beating the 8.8 million new subscribers from the previous quarter. The surge in customers left Netflix with over 260 million global subscribers at the end of 2023, a yearly increase of nearly 30 million.
This is a stark contrast to 2022's increase of 8.9 million subscribers, which had raised questions about whether the streaming giant was losing momentum due to increasing competition. However, Netflix bounced back, mainly through the introduction of a low-cost streaming plan that included adverts for the first time, and an effort to stop viewers accessing the service for free using the passwords of paying customers.
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Netflix has boosted its profits by tightening its budget and hiking the price of its top streaming plan by 10%. The company's latest quarter saw earnings of $937.8 million, a significant increase from $55.3 million in the same period last year. Revenue also rose by 13% to $8.83 billion.
However, despite exceeding revenue forecasts, Netflix missed earnings per share targets due to a $239 million charge related to foreign debt. The firm's strategy has been well-received by Wall Street, with a 65% increase in its stock price last year. After revealing its fourth-quarter figures, shares rose over 8%.
CFRA Research analyst Kenneth Leon praised Netflix, stating it "is ahead of peers with new revenue streams, and no one can compete with its technology platform, programming, and global distribution." Now, the challenge for Netflix is maintaining this momentum, with the "Raw" deal suggesting live programming could be a new focus for the company.
Netflix management expressed optimism in a recent letter to shareholders, stating: "If we continue to execute well and drive continuous improvement - with a better slate, easier discovery, and more fandom - while establishing ourselves in new areas like advertising and games, we believe we have a lot more room to grow,"
During a conference call, Netflix co-CEO Greg Peters revealed that it might take several years before ad sales generate significant revenue. However, he highlighted the success of the $7-per-month plan with commercials, which now attracts about 40% of new subscribers in available markets.
Peters also expressed confidence in persuading more viewers who currently use paying customers' passwords to get their own plans. "That (crackdown) will improve our growth for years," he said.
Analysts are predicting that Netflix will further expand into video games, a venture it started in 2021 during the pandemic. Although the video game segment is still relatively small, Netflix reports an increase in subscribers spending more time gaming on its service instead of watching TV series and films.
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