Netflix registered its third-consecutive quarter of accelerating subscriber growth in the final three months of 2023, closing out a comeback year that included a crackdown on viewers freeloading on the video-streaming service and a smattering of price hikes.
The fourth-quarter results announced Tuesday provided evidence that Netflix was able to come up with a formula that produced a spike in subscribers even as it became more expensive to watch its lineup of TV shows and movies.
Netflix signalled it will try to justify the higher subscription prices -- and perhaps reel in more advertisers to a low-cost plan that includes commercials -- with a US $5 billion deal announced Tuesday that will bring the popular wrestling program, WWE's "Raw," to its service.
That weekly show, set to move to Netflix next year, will supplement a smorgasbord of TV shows that include the likes of the Emmy-award-winning black comedy "Beef" and the Oscar-nominated film, "Maestro."
Drawing cards like that helped the Los Gatos, California, company add 13.1 million worldwide subscribers during the October-December period, well above analyst projections, according to FactSet Research. The holiday season gains -- the biggest Netflix has ever posted in the fourth quarter -- exceeded the 8.8 million additional subscribers that Netflix posted in the July-September period, which in turn jumped above the numbers recorded in the quarter starting the year.
The rising tide of customers left Netflix with more than 260 million global subscribers at the end of 2023 -- an annual increase of nearly 30 million subscribers. Last year's performance was a stark contrast to 2022's increase of 8.9 million subscribers -- a lackluster showing that raised questions whether the video-streaming pioneer was losing steam amid stiffening competition for viewers.
But Netflix managed to bounce back, primarily through the rollout of a low-priced streaming plan that injected commercials into its service for the first time, combined with an effort to block viewers who had been accessing the service for free by using the passwords of paying customers.
At the same time, Netflix tightened its programming budget while also increasing the price of its top-tier streaming plan by 10 per cent to help appease investors seeking higher profits. That paid off in the latest quarter, which saw Netflix earn US$937.8 million, or US$2.11 per share, up from net income of US$55.3 million, or 12 cents per share, the same time in the previous year. Revenue climbed 13 per cent from the prior year to US$8.83 billion.
The revenue exceeded analysts' forecasts, while earnings per share missed analyst targets, partly because of a US$239 million charge tied to its foreign debt.
Netflix's strategy has been a hit with Wall Street, reflected in a 65 per cent increase in its stock price last year while shares of other media giants such as Walt Disney Co. and Warner Bros. Discovery have struggled to prove they can make money from their video-streaming services. The company's shares rose more than 8 per cent in Tuesday's extended trading after its fourth-quarter numbers came out.
Netflix "is ahead of peers with new revenue streams, and no one can compete with its technology platform, programming, and global distribution," CFRA Research analyst Kenneth Leon wrote in a recent assessment of the streaming and cable TV landscape.
The challenge facing Netflix now is coming up with ways to sustain last year's momentum, with the "Raw" deal making it seem like live programming is now being eyed by the company as fertile ground.
"If we continue to execute well and drive continuous improvement -- with a better slate, easier discovery, and more fandom -- while establishing ourselves in new areas like advertising and games, we believe we have a lot more room to grow," Netflix management wrote in a Tuesday letter to shareholders accompanying its fourth-quarter review.
In a conference call with analysts, Netflix co-CEO Greg Peters predicted it will be several years before ad sales bring in significant revenue. But the company is still benefiting from the US$7-per-month price for the plan with commercials, with that option now accounting for about 40 per cent of its new subscribers in the markets where it's available.
Peters told analysts that Netflix remains confident that it can still convince more viewers now using the passwords of paying customers to ante up for their own plans. "That (crackdown) will improve our growth for years," Peter said.
Analysts have also been anticipating the company will amplify a push into video games that Netflix embarked upon in 2021 during the throes of the pandemic.
While emphasizing the video game segment remains relatively small, Netflix says it's starting to see more subscribers spending more time on its service engaged in that pastime instead of watching TV series and films.
The deal with WWE is worth US $5 billion.
Members of Parliament are debating the second Conservative motion of non-confidence in Prime Minister Justin Trudeau’s government of the week.
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An Air Canada flight headed to Toronto from Frankfurt diverted to Edinburgh due to an emergency Thursday, the airline says.
A partial masking mandate has returned to Nova Scotia hospitals and provincially run healthcare facilities for visitors and healthcare workers.
Canadian singer K’naan has been charged with sexual assault after being arrested by police in Quebec City.
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An NDP MP has introduced a bill that would criminalize residential school denialism, saying it would help stop harm caused toward survivors, their families and communities.
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Vancouver police blocked traffic and the SkyTrain's Millennium Line suspended service to VCC-Clark Station due to an "unstable crane" in the area Thursday.
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Vancouver police blocked traffic and the SkyTrain's Millennium Line suspended service to VCC-Clark Station due to an "unstable crane" in the area Thursday.
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Changes in Russia's nuclear doctrine that were announced by President Vladimir Putin are intended to discourage Ukraine's Western allies from supporting attacks on Russia, the Kremlin said Thursday.
A Montana man has been arrested after witnesses said he intentionally and repeatedly swerved his car at three motorcycles in south-central Montana, running one off the road and killing its driver, officials in Carbon County said.
In her first interview in more than two years, former U.S. first lady Melania Trump said she saw her husband's survival in two attempts on his life as 'miracles' and offered new details about the former president, including his desire to have more children.
Norwegian police have issued an international search request for Rinson Jose, a Norwegian-Indian man linked to the sale of pagers to the Lebanese militant group Hezbollah that exploded last week, they said on Thursday.
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French President Emmanuel Macron and Prime Minister Justin Trudeau have signed a statement aimed at collaborating more on issues ranging from Ukraine to foreign interference.
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British supermodel Naomi Campbell has been barred from being a charity trustee in England and Wales for five years after the poverty charity she founded nearly two decades ago was deemed Thursday to have been 'poorly governed' with 'inadequate financial management.'
Hoda Kotb, a fixture at NBC for more than two decades, says she will leave her morning perch on the 'Today' show early next year, telling staffers 'it's time.'
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Open AI Chief Executive Officer Sam Altman (C) speaks at the Advancing Sustainable Development through Safe, Secure, and Trustworthy AI event on Sept. 23, 2024, in New York. (Bryan R. Smith/Pool Photo via AP)
Billionaire Elon Musk's social media site X has complied with Brazilian Supreme Court Justice Alexandre de Moraes' orders and requested its service be re-established in the country, a source said Thursday.
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The Chicago White Sox averted a record-breaking loss for the third straight day, beating the Los Angeles Angels 7-0 on Thursday behind Chris Flexen's sharp pitching performance.
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A Cardston, Alta., woman is $1 million richer after a Lotto Max draw in early August.
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A northern Ontario man was in the bush hunting for partridge with his fiancé when he came across a big bull moose entangled in some hydro lines in his antlers.
A pedestrian is dead following a collision with a commercial motor vehicle on Highway 17 west of Thunder Bay on Thursday morning.
Every other day, Derek Moonias drives 15 minutes to the airport in Neskantaga First Nation and fills his pickup truck with cases of bottled water flown in on the dime of the federal government.
A soccer game in England on Tuesday night drove a spike in online traffic across the Atlantic to a website launched by the Newfoundland and Labrador government.
Newfoundland and Labrador sponsored a minor football team in England, now they’re about to play one of the biggest clubs in European soccer.
Newfoundland and Labrador's chief medical officer is monitoring the rise of whooping cough infections across the province as cases of the highly contagious disease continue to grow across Canada.
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