Streaming giant sees increase in subscribers despite higher cost
Netflix experienced a surge in its subscriber base, adding 13 million subscribers in the last quarter of the previous year, despite implementing price increases. The streaming giant finished 2023 with over 260 million subscribers globally, reporting a profit of $938 million in the final quarter compared to $55 million in the same period the previous year. The company expressed confidence in the expansion of streaming and highlighted a robust content lineup for the upcoming year, including a sequel to the popular Squid Game series and a new show based on the bestselling novel "3 Body Problem."
Netflix's shares rose over 8 percent to $532.75 in after-market trading following the announcement of the earnings figures. Insider Intelligence principal analyst Ross Benes acknowledged Netflix as the clear front-runner in the streaming wars. Despite industry challenges, such as Hollywood strikes in the past year, Netflix emphasized its commitment to offering a wide range of content to meet consumer demands for choice and control in the streaming space.
In its earnings letter, Netflix highlighted the significance of streaming as the price of entry in modern entertainment, aligning with consumer preferences. The company remains optimistic about the future, believing in the ongoing growth of the streaming market. The announcement coincided with Netflix's long-term broadcast deal with WWE, making Netflix the exclusive new home of the WWE's flagship program "Raw" starting in 2025.
The 10-year deal, valued at $5 billion, includes the streaming of WWE shows and live events globally. Netflix has the option to extend the deal for an additional 10 years or opt out after the initial five years. The move into sports broadcasting marks Netflix's strategy to diversify its content offerings and compete in an increasingly competitive market.
Acknowledging the competition in the streaming industry, Netflix cited heavy investments by rivals like Amazon, Apple, and YouTube. The company emphasized the importance of continuously improving its entertainment offerings to stay relevant and foster growth. Late last year, Netflix increased its subscription prices in the U.S., raising its basic plan to $11.99 monthly and the premium plan to $22.99. The company also expanded its efforts to address password-sharing beyond immediate family members.
Netflix launched an ad-subsidized tier priced at $7 monthly, aiming to tap into new revenue streams. The ad-supported offering, which represents 40 percent of new sign-ups, is gaining momentum, prompting Netflix to retire its lowest-cost ad-free plan in some regions in the second quarter of this year. Netflix co-chief executive Greg Peters highlighted the success of the company's mobile games, with a growing lineup that includes popular titles like "Grand Theft Auto."
Despite the challenges and competitive landscape, Netflix remains bullish on its position in the streaming market, emphasizing its commitment to delivering a compelling entertainment experience for subscribers.
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By- Sahiba Suri
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