Netflix Inc. experienced a remarkable surge in customer sign-ups during the last quarter of 2023, marking its most substantial growth since the early days of the pandemic when people were confined to their homes. The streaming giant added 13.1 million customers in this period, surpassing Wall Street’s estimate of 8.91 million. Impressively, Netflix exceeded projections in every global region, with over 5 million new customers in Europe, the Middle East, and Africa alone. The company also reported a robust financial performance, with sales reaching $8.83 billion, surpassing forecasts.
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The positive results propelled Netflix’s shares to climb as much as 8.9% to $535.91 in extended trading after the earnings announcement. Over the past year, the stock has seen a significant uptick of 38%, showcasing the streaming service’s continued market appeal.
This resurgence follows a challenging 2022 for Netflix, and the strong year-end growth can be attributed to strategic measures taken, including cracking down on password sharing, introducing a more affordable advertising-supported option, and offering a compelling lineup of programs. Notable hits in the latest quarter include the post-apocalyptic thriller “Leave the World Behind” and a documentary featuring soccer legend David Beckham.
While many competitors in Hollywood grapple with shrinking cable networks and unprofitable streaming services, Netflix has successfully navigated challenges. The company’s proactive approach to addressing account sharing has evidently paid off, contributing to its robust growth.
Despite the slow start of the ad-supported tier, it has gained momentum, boasting over 23 million users. Netflix acknowledges the need for ongoing efforts to enhance its advertising business, with Co-CEO Greg Peters emphasizing the untapped potential among households yet to join the streaming service.
A significant development for Netflix’s advertising endeavours is a 10-year deal with World Wrestling Entertainment (WWE) to offer weekly live programming from 2025. This collaboration is expected to attract WWE’s large, multigenerational fan base, particularly overseas.
While Netflix has traditionally derived its revenue from on-demand content viewing, it has started venturing into live programming and video games. Co-CEO Ted Sarandos clarified that the WWE deal is focused on sports entertainment rather than signalling an immediate interest in sports rights.
Looking ahead, Netflix anticipates a slower pace of customer additions in the first quarter of 2024 compared to the robust growth seen at the end of 2023. However, the company remains optimistic about maintaining double-digit revenue growth, partly driven by periodic price increases.
Although fourth-quarter earnings reached $2.11 per share, falling short of Wall Street forecasts, Netflix concluded 2023 with a net income of $5.41 billion and $7.1 billion in cash and short-term investments. Despite potential challenges in sustaining the year-end subscriber growth, Netflix’s commitment to innovation and strategic initiatives positions it as a key player in the evolving streaming landscape.
