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Netflix announced a major boost in sign-ups in the fourth quarter on Tuesday. The company added more than 13 million subscribers for the quarter, compared to Wall Street’s expectation of 8.7 million.
While Netflix added 1.2 million paid subscribers in the fourth quarter in the US, much of the strongest subscriber growth came internationally from Europe and Asia.
Overall, Netflix now has a record number of subscribers at 260.3 million.
And investors seem to be cheering: Netflix’s stock jumped more than 7% in after-hours trading Tuesday.
Password sharing and Netflix’s foray into ads
In the past year, the company implemented several initiatives aimed at adding subscribers, including a password-sharing crackdown that pushed password “borrowers” into creating their own subscriptions and introducing an advertising-supported subscription tier for $6.99.
The plan is significantly cheaper than Netflix’s ad-free offerings, at $6.99 per month in the US. In October, Netflix said it raised the price of its premium ad-free plan to $22.99 while its one-stream basic plan rose to $11.99.
Earlier this month, Amy Reinhard, Netflix’s president of advertising, said Netflix’s ad tier hit more than 23 million monthly memberships.
On Tuesday, Netflix sounded a positive note on its growing advertising business.
On the company’s fourth-quarter earnings call, Netflix co-CEO Greg Peters said he had high hopes for Netflix’s ability to snatch ad dollars from traditional TV competitors.
“We know ad dollars follow engagement. We’ve got the most engaged audience so we believe we’re well positioned to capture some of that ad spend that shifts from linear to streaming,” he said.
In Tuesday letter to shareholders, Netflix declared its password-sharing crackdown a success, as well.
“We believe we’ve successfully addressed account sharing, ensuring that when people enjoy Netflix they pay for the service too,” it said.
Netflix finished 2023 with 12% revenue growth, up from 6% growth in 2022. The company posted revenue of $8.8 billion for the fourth quarter but came short of Wall Street’s expectations for earnings-per-share at $2.11, according to Factset estimates.
Gaming, sports and entertainment
Last year was turbulent for the entertainment industry as both writers and actors went on strike for several months. Netflix, however, has recently made investments to diversify its business outside of scripted programming.
Looking ahead to 2024, Netflix said it sees “big opportunities” to further improve its core TV and film content, while also broadening its offering into gaming, live entertainment and sports programming.