Netflix’s nice day continues. After inking a $5 billion deal with the WWE for its first main little bit of stay programming, the streamer had a home-run quarter, including 13 million subscribers, bringing its whole to 260 million worldwide.
On its year-end earnings name Tuesday, Netflix reported booming numbers for its last quarter, making for a promising start to 2024. Revenues had been up 12.5% to $8.8 billion and web revenue was up 160% to $938 million for the fourth quarter of 2023, and Netflix completed the yr with $33.7 billion in income, up 6.7%, with a 20.4% enhance in income bringing the yr finish whole to $5.4 billion.
These numbers smashed analyst estimates for monetary efficiency, and buyers cheered it on with an 8.6% enhance within the inventory value in post-trading hours.
Successful the streaming wars after the Hollywood strikes
The standout outcomes come after Netflix and Hollywood got here to a standstill throughout twin writers’ and actors’ strikes final summer season. Netflix emerged from that upheaval even better positioned than it already had been within the cutthroat streaming business. Its studio rivals had floundered throughout the strikes, with smaller worldwide slates to lean on throughout the manufacturing freezes. Netflix took a victory lap in its earnings launch, saying it had confirmed streaming could possibly be a “very healthy business.”
Many rivals have reversed their earlier coverage of not licensing content material to Netflix because the strikes ended. Co-CEO Ted Sarandos welcomed the change, touting Netflix’s broad attain and advice algorithm as a method to achieve new audiences and switch outdated exhibits into new hits, a phenomenon was finest exemplified when the USA Community drama Fits became a smash hit on Netlfix, years after it first aired.
“Sometimes we can uniquely add more value to the studio’s IP than they can,” Sarandos stated. “Not all the time, but sometimes, we’re the best buyer for it.”
Sarandos hoped he might proceed to make such offers with studios. “I’m thrilled the studios are more open to licensing again, and I’m thrilled to tell them we are open for business,” he stated.
Whereas legacy rivals like Disney, Paramount, and Warner Bros. Discovery would possibly face a risky panorama, as mergers and consolidation beckon, Netflix was blissful to remain above the fray.
“It’s logical to expect further consolidation, particularly among companies with large and declining linear networks,” the corporate stated in an investor letter, rubbing salt within the wound.
It additionally shed any rumors of the acquisition of a significant linear asset, which some legacy media corporations are rumored to be curious about promoting.
“We’re not interested in acquiring linear assets. Nor do we believe that further M&A among traditional entertainment companies will materially change the competitive environment given all the consolidation that has already happened over the last decade.”
Though Netflix did say it expects competitors to stay fierce as streamers, each new and outdated, compete for content material and subscribers.
Whereas the corporate didn’t present particular numbers, it stated a lot of its subscriber development was right down to the password sharing crackdown it started implementing in March. If a consumer desires to share their account with somebody, they’re now required to pay a further $7.99 a month on high of their common subscription price. Netflix stated it now considers this system a standard a part of its enterprise that may yield dividends for the foreseeable future.
Limiting password sharing is about “finding the most effective way to convert folks who are using the service, [with] the right call to action, the right nudge, at the right time,” Netflix co-CEO Greg Peters stated on the earnings name. “Those might have been historical borrowers or folks that are new to the service as well. We’re going to continue to improve. That will continue to improve our growth for years ahead. Not just 2024.”
The opposite massive growth in Netflix’s enterprise has been the expansion of its ad-supported tier. Netflix’s head of promoting Amy Reinhard not too long ago stated the corporate had 23 million subscribers to its model with adverts. That was a 70% enhance in comparison with the prior quarter, the corporate stated, with 40% of all new subscribers within the 12 markets the place it has an advert tier having signed up for the service.
On the decision, Peters stated line of enterprise was nonetheless rising. “We’ve got years of work ahead of us to take the ads business to the point where it’s a material impact or to our general business.”
