Netflix Smashes Expectations And Adds Record 13 Million Subscribers In Fourth Quarter
Is it time to declare the streaming wars over and crown Netflix the winner? Perhaps not quite, but the dominant streamer continues to make the case for the crown.
In fourth quarter 2023 earnings results released Tuesday during a shareholder call, Netflix outpaced even the most optimistic expectations, adding 13.12 million new subscribers, its biggest single-quarter gain ever and up 12.8 percent over the same quarter last year, outperforming the strong growth in the third quarter (8.76 million).
Analysts had projected anywhere from 8 million to 10 million new subscribers. Netflix service now has 260 million subscribers, more than any other streaming service in the world.
Our healthy top line growth reflects the benefits of paid sharing, our recent price changes, and the strength of our underlying business driven by a strong slate, the company said in a letter to shareholders.
The benefits of paid sharing that Netflix refers to is the password-sharing crackdown that began last year in the United States. The company had claimed millions of people were sharing passwords with friends and family, meaning one account might have several people using it. And it appears that internal research was right.
Netflix’s crackdown has offered subscribers a way to pay less by stacking additional subscriptions underneath the main one, and clearly, it’s a success, based on Netflix’s strong subscriber gains this year.
Netflix also noted its in-demand content, saying it had the top streaming show in 48 out of 52 weeks, according to Nielsen. It singled out My Life With the Walter Boys (42.6 million views) and All the Light We Cannot See (35.4 million views) as particularly strong performers.
As of this month, Netflix is up to 23 million ad-supported subscribers, who get a lower price in return for viewing short ads. That is up from 15 million in November and may be explained by people switching from the standard package to ad-supported when Netflix implemented the recent price hike.
In a needle to competitors like Warner Bros. Discovery, which is rumored to be pursuing yet another merger, Netflix said it’s not interested in acquisitions. It noted it does not 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.
Instead, it says it will continue to invest in content, at a time when other streamers have notably pulled back. Several have notoriously lost money and struggled to show growth proposition — but Netflix isn’t one of them. In fact, it seems more committed than ever to bulking up on content, as evidenced by its latest deal.
Netflix has been chasing live events as a new way to draw eyeballs to the platform. Hours before the fourth quarter results were released came word of its biggest live programming coup to date: gaining the rights to Monday Night Raw, Smackdown (though only outside the U.S.) and other major WWE programming, in a deal reportedly worth $5 billion over 10 years. It will take effect in January 2025.
This marks the streamer’s biggest live sports acquisition yet, and it continues the recent flight of live sporting events to streaming platforms, such as NFL Thursday games on Amazon and Peacock’s recent record-breaking broadcast of an NFL playoff game.
WWE programming has never had a spillover effect on broadcast and cable — that is, millions of fans tuned in for Raw but didn’t stick around to watch other shows on the network that carried it. But streaming is different — you have to subscribe to the streamer to watch, so it marks a win from day one for Netflix.
Streaming seems like the natural place for sports, too, because the streamers have deep pockets. Broadcast and cable are dealing with increasingly fractured audiences and decreasing ad revenue. Sports draw the largest audiences on TV (including 93% of the most-watched shows in 2023), and they’ll continue to migrate to wherever the biggest deals come from.
Indeed, streamers are ramping up their sports focus — Amazon recently invested $115 million into Diamond Sports Group (owner of regional sports network Bally Sports), and Apple TV+ has invested in MLS and MLB. Netflix will have competition as it aims for more live programming.
The real question is, what’s the next big event to migrate? Don’t expect the Super Bowl to go off broadcast, but perhaps March Madness, MLB, or some Olympic events could follow WWE’s lead.
As earnings came out, also came word that Scott Stuber, Netflix’s head of film, is exiting the company to start his own studio. It’s a big loss — Stuber built Netflix into arguably the most successful streaming movie studio since joining in 2017, with hits and critical successes including Bird Box, Roma, The Irishman, Glass Onion: A Knives Out Mystery, and more.
Under Stuber, Netflix received the most Oscar nominations of any streaming studio from 2020-2022, and he attracted big names such as Martin Scorsese, Greta Gerwig, Spike Lee, Alfonso Cuarón, and more behind the camera.
He also helped pioneer the Netflix theatrical release model, which has continued to evolve. Bela Bajaria, Netflix’s chief content officer, will take over for Stuber in March until a replacement is hired.
This month is a time of disruption in streaming — Verizon’s chief content officer, Erin McPherson, is also reportedly leaving her position after helping to forge deals with Netflix, Disney+, and other streamers, though she won’t leave until late February.
