Netflix posted one of its strongest quarters of customer growth since the pandemic lockdowns in 2020.
The streaming giant added 13.12 million new subscribers during the fourth quarter (Q4) of 2023, a feat which was largely driven by the company’s crackdown on password-sharing, the addition of a new ad-supported subscription tier, and its robust catalog of hit movies and TV shows, according to the latest earnings report.
Although the company faced major backlash for introducing commercials and cracking down on password sharing in 2023, the results speak for themselves.
By scaling its advertising business, Netflix said it can “tap into significant new revenue and profit pools” over the medium to longer-term horizon. It has also successfully addressed account sharing, thus ensuring that when people enjoy the streaming service, they pay for it, too.
“We believe there is plenty of room for growth ahead as streaming expands, and our north star remains the same: to thrill members with our entertainment,” the company said in a letter to shareholders. “If we can continue to improve Netflix faster than the competition, we’ll have an increasingly valuable business – for consumers, creators, and shareholders.”
Shares of Netflix (NASDAQ: NFLX) soared more than 10% following the stronger-than-expected earnings report and are up 17% on the year. Overall, Netflix had approximately 260.28 million global paid subscribers at the end of 2023, marking a 12.5% year-over-year increase and a new record for the company’s streaming service.
With a record number of subscribers and accelerated growth prospects, Netflix saw revenues jump 12% in 2023, which was up from 6% in the preceding year.
While Netflix plans to continue scaling its ad-tier service over the coming year, advertisements will not be the company’s primary driver in 2024, according to Spencer Neumann, chief financial officer for Netflix.
“We’re focused on continually improving our service,” said Neumann during the earnings call. “If we do that well, we’ll have more members or more value that we can occasionally price into and lots of engagement to build a big and profitable ads business.”
Although ads will not be the main driver, they will be a major focus for the company in 2024, according to co-CEO Greg Peters.
“We’re focused on the additional work that we can do in that space,” Peters said in the earnings call. “That means making the ads plan more attractive.”
To do that, Peters said Netflix will continue investing in the company’s future growth. So far, Netflix has added streams, higher resolution, and downloads. The company has also enhanced engagement with its partner channels.
