The streaming giant gained over 13 million subscribers in the three months to December, claiming password-sharing crackdown a success.
Netflix defied Wall Street expectations in the closing months of 2023 by gaining 13.1 million subscriptions in their final quarter, according to their new earnings report.
This was the best three-month figure recorded since the pandemic year of 2020, and brings Netflix’s total subscribers to 260.3 million globally.
The streaming platform also reported an operating income (profit minus operating expenses) of $1.5 billion (€1.38 billion) in their final quarter, up from $550 million a year earlier.
“These latest results reaffirm that Netflix is firmly the king among all streamers,” said Paolo Pescatore, analyst and founder at PP Foresight. “This despite last year’s writer’s strike which is unlikely to negatively impact the streamer.”
Aside from industrial action in Hollywood last year, which saw actors and writers out of work for several months, some shareholders were also nervous about the effect of Netflix’s password-sharing crackdown.
In response to subscriber losses in 2022, the streaming giant began to restrict account sharing in mid-2023, a strategy that initially provoked public anger.
Much to Netflix’s satisfaction, their password-sharing purge has nonetheless paid off.
“We believe we’ve successfully addressed account sharing, ensuring that when people enjoy Netflix they pay for the service too,” the firm said in a letter to shareholders.
The streaming giant paused price hikes whilst it rolled out its anti-sharing strategy last year, but this isn’t expected to continue in 2024.
Greg Peters, co-chief executive, explained: “We largely put price increases on hold while we were rolling out the paid sharing work because we saw that as a form of substitute price increase. Now that we’re through that, we’re able to resume our sort of standard approach towards price increases.”
Many of Netflix’s new customers are opting for the cheaper plans that include advert breaks, according to the earnings report.
The streamer said, their ad plan accounts for 40% of all new sign-ups in countries with this type of subscription, which means it’s considering axing its ad-free basic subscription.
Basic plans without ads, which cost €13.49 a month, could be scrapped in Canada and the UK in the second quarter of this year.
This type of subscription is significantly more expensive than the €5.99 ad-supported plan, and less than the €19,99 premium plan.
After years of rejecting ad-supported viewing, Netflix’s new direction is being branded by some as hypocritical.
In earlier days, the platform distinguished itself from many linear channels by offering non-interrupted content, claiming that advertisements harmed the viewer experience.
A deal with World Wrestling Entertainment
On Tuesday, Netflix also announced a 10-year, $5 billion (€4.59 billion) deal signed with World Wrestling Entertainment, which will bring the weekly show WWE Raw to the platform.
The move brings Netflix further into the live streaming sport market, a direction also adopted by competitor platforms like Amazon and Apple.
“WWE Raw is sports entertainment, which is right in the sweet spot of our sports business, which is the drama of sport,” said co-chief executive Theodore A. Sarandos.
In November, Netflix debuted its first-ever live sporting event, “The Netflix Cup”, after showing live programmes “Love is Blind: Brazil” and “Chris Rock: Selective Outrage” earlier in the year
The streaming company nonetheless told shareholders that it wasn’t interested in bidding for conventional sports rights.
“It makes sense [for Netflix] to bolster its offering with live (entertainment) events to offer a diversified portfolio of programming,” said Paolo Pescatore.“This way it can cater for the entire household.”
Netflix’s next live event is the Screen Actors Guild Awards, planned for 24th February.