Netflix registered its third-consecutive quarter of accelerating subscriber growth in the final three months of 2023, closing out a comeback year which included a crackdown on viewers freeloading on the video-streaming service and a series of price hikes.
The fourth-quarter results announced on Tuesday provided evidence that Netflix was able to come up with a formula that produced a spike in subscribers even as it became more expensive to watch its lineup of TV shows and movies.
Netflix signalled it will try to justify the higher subscription prices — and perhaps reel in more advertisers to a low-cost plan that includes commercials — with a 10 billion US dollar (£7.9 billion) deal announced on Tuesday that will bring the popular wrestling program, WWE’s Raw, to its service.
That weekly show, set to move to Netflix next year, will supplement a smorgasbord of TV shows which include the likes of the Emmy-award winning black comedy Beef and the Oscar-nominated film Maestro.
Drawing cards like that helped the California company add 13.1 million worldwide subscribers during the October-December period, well above analyst projections, according to FactSet Research.
The holiday season gains — the biggest Netflix has posted in the fourth quarter — exceeded the 8.8 million additional subscribers Netflix posted in the July-September period, which in turn jumped above the numbers recorded in the quarter starting the year.
The rising tide of customers left Netflix with more than 260 million global subscribers at the end of 2023 — an annual increase of nearly 30 million subscribers.
Last year’s performance was a stark contrast to 2022’s increase of 8.9 million subscribers — a lacklustre showing which raised questions over whether the video-streaming pioneer was losing steam amid stiffening competition for viewers.
But Netflix managed to bounce back, primarily through the rollout of a low-priced streaming plan which injected commercials into its service for the first time, combined with an effort to block viewers who had been accessing the service for free by using the passwords of paying customers.
At the same time, Netflix tightened its programming budget while also increasing the price of its top-tier streaming plan by 10% to help appease investors seeking higher profits.
That paid off in the latest quarter, which saw Netflix earn 937.8 million dollars (£739.3 million), or 2.11 dollars (£1.66) per share, up from net income of 55.3 million dollars (£43.6 million), or 12 cents (10p) per share, the same time in the previous year.
Revenue climbed 13% from the prior year to 8.83 billion dollars (£6.96 billion).
The revenue exceeded analysts’ forecasts, while earnings per share missed analyst targets, partly because of a 239 million dollar (£188.4 million) charge tied to its foreign debt.
Netflix’s strategy has been a hit with Wall Street, reflected in a 65% increase in its stock price last year while shares of other media giants such as Walt Disney and Warner Bros Discovery have struggled to prove they can make money from their video-streaming services.
The company’s shares rose nearly 7% in Tuesday’s extended trading after its fourth-quarter numbers came out.
