SAN FRANCISCO — In an impressive show of growth, Netflix welcomed almost 19 million new subscribers during the peak holiday quarter, surpassing analysts’ expectations and concluding a remarkable year for the streaming giant. This surge indicates that its foray into live programming is yielding positive results.
The data released recently reflected the October to December period, which featured prominent events such as a highly publicized fight between YouTube personality Jake Paul and legendary former heavyweight boxer Mike Tyson, alongside two NFL games aired on Christmas Day. These significant broadcasts contributed to Netflix’s remarkable subscriber increase, which outperformed the 13 million new subscriptions recorded in the same quarter of 2022.
Netflix’s venture into live programming mainly aims to bolster its advertising revenue, but it also appears to provide existing users with additional incentives to maintain their subscriptions, while attracting new viewers. The platform concluded the previous year with over 300 million global subscribers, a rise of 41 million compared to 2022. This growth outstrips its previous record set in 2020, when Netflix added 36.6 million subscribers during pandemic lockdowns that left audiences searching for home entertainment.
Mike Proulx, an analyst at Forrester Research, believes that live programming could serve as Netflix’s “secret ingredient” in solidifying its competitive advantage over other streaming services. He noted that with an increase in available programming options, streaming platforms need to set themselves apart. “FOMO (fear of missing out) is a powerful tool in piquing interest and creating stickiness,” Proulx stated.
This latest quarterly update marks Netflix’s final planned disclosure of subscriber counts, as the company shifts its focus toward financial performance to attract investor attention.
The figures for the most recent quarter were encouraging, as Netflix reported earnings of $1.9 billion, translating to $4.27 per share—almost double from the same quarter in 2022. Revenue climbed 16% from last year, totaling $10.2 billion.
In an effort to further enhance its financial standing this year, Netflix announced in its letter to shareholders that price increases would be implemented in the U.S., Canada, Portugal, and Argentina shortly. While specific new pricing was not disclosed, the company typically raises subscription costs by $1 to $2 per month.
Demonstrating confidence that these price hikes would not provoke a mass exodus of subscribers, Netflix slightly adjusted its revenue outlook for the year, aiming for a mid-range of $44 billion—roughly a 13% increase from the previous year.
“When you’re going to ask for a price increase, you better make sure you have the goods and the engagement to back it up,” remarked Netflix co-CEO Ted Sarandos during a recent analyst call.
Following this report, Netflix’s stock spiked by 14% in after-hours trading. If the stock continues to perform well during regular trading, it could set a new record. Last year, Netflix shares surged 83%, adding nearly $200 billion in shareholder wealth as the platform strengthened its position at the forefront of the streaming industry.
In addition to raising subscription prices, Netflix is also focusing on increasing advertising revenues. This initiative began in late 2022 with the introduction of a lower-cost subscription option that included commercial interruptions for the first time. Advertisements are displayed to all subscribers during live events, contributing to Netflix’s commitment to expand this sector, leading to lucrative agreements with organizations such as the NFL, World Wrestling Entertainment, and the Women’s World Cup. During the conference call, Netflix co-CEO Greg Peters indicated that the ad-supported tier accounted for over half of the new subscribers in the last quarter, adding that the company’s advertising strategy has “transitioned from crawl to walk.”
However, Netflix has not disclosed specific advertising revenue figures, stating that earnings from this sector will remain modest for at least another year or two.
Despite these changes, Netflix continues to draw viewers with its extensive library of scripted series and films. The programming slate for the year includes highly anticipated new seasons of hits like “Stranger Things,” “Squid Games,” and “You.” To maintain a robust content pipeline, the company plans to raise its programming budget to $18 billion this year, marking an increase of approximately $1 billion.
