Netflix now has 230.75 million paying subscribers, well beating its forecast and market expectations for the last quarter, and turning the page on a very difficult 2022 for the streaming service. The platform gained 7.66 million new subscribers between October and December, much more than expected, according to its results press release published Thursday, January 19.
It also announced that its founder Reed Hastings was giving up his place as co-CEO to Greg Peters, alongside Ted Sarandos.
The sequel after the ad
“The Mask” on Netflix: the king of the (telephone) scam
“I am so proud of our first 25 years, and so excited for the next 25”, said Reed Hastings, who originally created a DVD rental service by mail. He will remain with the company as “executive chairman”.
Always “under great pressure”
Netflix went through a rough patch last year. The service had lost nearly 1.2 million subscribers in the first half. He had started to seduce millions again in the third quarter, and benefited at the end of the year from new seasons of successful series like “The Crown”, on Queen Elizabeth II, and “Emily in Paris”.
New programs, including the phenomenon series “Wednesday” and the documentary series “Harry & Meghan”, where Harry and his wife recount how they decided to abandon the British monarchy, have also contributed significantly to the popularity of the service.
Why the ‘Kaleidoscope’ series is a real hit (and not just for random episode order)
But Netflix remains “under strong pressure to rectify the trajectory and achieve better results for its shareholders”notes Paul Verna, analyst at Insider intelligence, after that “its title has lost more than 50% of its value in 2022”.
The sequel after the ad
In the fourth quarter, the Californian company achieved 7.85 billion dollars in turnover, but generated only 55 million in net profits, well below the 257 million expected by the market.
“The beginning of a turning point for the company”
Netflix took steps last year to generate new revenue streams, which should pay off this year.
In particular, the platform launched a new cheaper subscription in November, with advertising – a less prestigious solution that it had long refused. “This is the beginning of a turning point for the company”believes Paul Verna. “We expect a relatively soft start, with advertising revenue of $830 million in 2023”.
“For Netflix, like other streaming companies, faces stiff competition, economic headwinds and an urgent need to focus on profitability rather than subscription growth”he explained.
The sequel after the ad
The group also plans to tighten the screw on the side of the sharing of identifiers and passwords, which allow many people to access the content of the platform without paying. The new regulations must be deployed during the current quarter. It will require users to pay to add profiles to their account.
Nicolas Winding Refn, from “Drive” to “Copenhagen Cowboy”: “Streaming is a force of nature that redefines everything”
“Based on our testing in Latin America, we expect terminations that will affect subscriber growth in the short term”, Netflix said in its press release. The service nevertheless thinks that this will convince consumers to subscribe to their own subscription, and therefore ” advance “ his income.
On Wall Street Thursday, the year-end subscriber growth and management change were well received. The title of the platform took 6.29% during electronic trading after the close of trading.
The half-start of Reed Hastings, however, constitutes “a significant psychological change for Netflix”considers Neil Saunders, analyst of GlobalData, who fears that the service becomes less audacious.
“As he remains chairman, the company retains its expertise, but there is a small risk that the culture of the company will change and become more cautious, especially in this context of economic uncertainty”he detailed.
