Netflix surpassed Wall Street’s fourth-quarter subscriber projections on Tuesday, thanks to a strong slate of series that featured the last season of the long-running royal drama “The Crown” and David Fincher’s original film, “The Killer.”
Netflix with 260 million subscribers
The business claimed that it attracted 13.1 million members in the December quarter, its highest-ever fourth-quarter subscriber growth, much above the forecast gains of 8.97 million. This increases the overall number of subscribers to 260 million.
Netflix shares rose 8.3% in after-hours trade. The stock rose 65% in 2023.
“It is becoming increasingly clear that Netflix has won the’streaming wars,'” noted Bank of America’s media analyst Jessica Reif Ehrlich.
Netflix’s shares of 65%
The firm announced per-share earnings of $2.11, which fell short of the consensus forecast of $2.22. Netflix said its per-share earnings were reduced by a $239 million noncash loss due to currency exchange rates.
Revenue increased to $8.8 billion, above expectations and the company’s own target of $8.7 billion for the quarter.
The streaming behemoth anticipates solid double-digit revenue growth in full-year 2024 as it continues to add users and expand in its advertising business.
Netflix stated that while advertising is not now a significant driver of income growth, it intends to change this by 2025.
Squid Game & other most-watched shows
The company attributed its success to the strength of its intellectual property, which includes “Squid Game: The Challenge,” a reality show based on its most-watched TV series.
New original series like “All the Light We Cannot See,” feature films like Zack Snyder’s “Rebel Moon: A Child of Fire,” and non-English-language programming, such as the third season of “Lupin” from France.
It also noted a high desire for licenced titles like “Young Sheldon.” Co-CEO Ted Sarandos stated that Netflix has a “rich history” of breaking some of television’s biggest blockbusters, such as “Breaking Bad,” “The Walking Dead,” “Schitt’s Creek,” and, most recently, “Suits.”
“I am thrilled that the studios are more open to licensing again, and I’m thrilled to tell them that we are open for business,” Sarandos said during Netflix’s investor livestream.
Bank of America’s Ehrlich
Bank of America’s Ehrlich wrote that Netflix is a beneficiary of changing market dynamics, which are forcing media companies to re-evaluate their strategy of retaining movies and television series exclusively for their own streaming services.
She described it as a “win-win” situation in which Netflix can minimise its investment in higher-risk original programming while also providing much-needed cash to other media businesses through licencing agreements.
Netflix stated that it sees growth opportunities if it continues to improve its programming slate and expands into new areas such as advertising and gaming.
While the gaming industry is still in its early stages, the company claims engagement has tripled.
Following last year’s simultaneous Hollywood strikes, Netflix’s Chief Financial Officer Spencer Neumann stated that the company aims to raise its content investment.
He expects the streamer to invest up to $17 billion this year, but adds, “We want to do it in a smart, judicious, responsible way.”
The company stated it will continue to invest in and experiment with live programming.
WWE On Netflix
Earlier on Tuesday, Netflix and TKO Group Holdings (TKO.N), opens new tab, announced a more than $5 billion contract to offer World Wrestling Entertainment’s “Raw” and other programming exclusively to the streaming service starting January 2025.
“For decades, the WWE has grown this multigenerational fan base that we believe we could serve and we can grow,” Sarandos said.
“We believe that WWE has been historically under-distributed outside of North America. And this is a global deal. So we can help them, and they can help us build that fandom around the world.”
According to Third Bridge analyst Jamie Lumley, the WWE purchase illustrates Netflix’s continued diversification of its content strategy.
“This is the company’s largest move into live programming yet and will bring a large volume of content to the platform each year,” said Lumley.
Netflix also promoted its new stage performance, “Stranger Things: The First Shadow,” based on its popular series.
To read our blog on “Netflix is gently dropping cheaper plans in a few countries,” click here
