Netflix gains 13.1 million paid subscribers amid password-sharing crackdown

Netflix gained 13.1 million subscribers in the final quarter of 2023, marking the most significant growth since the pandemic began and surpassing the estimated 8.97 million subscribers reported by Reuters.

 

The year-end increase in sign-ups can be attributed to customers, motivated by the company's efforts to curb password sharing by creating separate accounts. 

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"Netflix is ​​already winning the streaming wars, and these strong results and performance look like a win, especially when compared to  streaming competitors," said Jeffrey Rodarchuk, an analyst at Pivotal Research Group. Reuters reported. According to Reuters, some analysts believe Netflix's valuation is justified given that  other streaming companies are increasingly focused on profitability. 

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This trend is expected to force these companies to license more content to Netflix, potentially increasing subscriber growth and average revenue per user.

The streaming platform's stock rose 10% on Wednesday, as a significant increase in subscribers boosted investor confidence.

According to Reuters, some analysts believe Netflix's valuation is justified given that  other streaming companies are increasingly focused on profitability. This trend is expected to force these companies to license more content to Netflix, potentially increasing subscriber growth and average revenue per user. 

Netflix stock commands a premium position relative to its peers, trading at about 30 times forward 12-month earnings compared to Walt Disney's 20.41 times, according to LSEG data.

The BBC reports that the profits are ironic for Netflix, which has historically been reluctant to sell advertising. The company has long resisted such requests, citing concerns about the impact on the viewer experience and the complexity of its business due to privacy risks and other issues. However, the company's profits declined in the first half of 2022 due to a decline in the number of subscribers. 

This required the company to develop innovative strategies to attract new audiences and generate additional revenue. “When we introduced paid sharing, we largely postponed the price increase. Now that we have done that, we can go back to  our standard approach,'' the BBC quoted joint chief executive Greg Peters as saying.

Many opted for company's cheapest plan

The BBC report further said that many new Netflix members chose the platform's most affordable plan, showing no reluctance even though it includes advertisements.

Netflix revealed that in the 12 countries where it introduces ads, including major markets like the UK and the US, this particular plan constituted 40% of the new subscriptions.

The gains represent an ironic turn of events for the company, which has long stubbornly resisted advertising sales due to the potential negative impact on the viewer experience and the complexity of its business due to privacy risks and other concerns. It shows. The company aims to allocate up to $17 billion to content this year, reflecting the disruption caused by two Hollywood strikes  involving actors and writers last year. Additionally, there is an increased focus on live programming, as evidenced by his recent announcement of a $5 billion rights deal. 

The deal, announced Tuesday, is designed to secure exclusive rights to  "Raw" and other content on World Wrestling Entertainment's platforms beginning in January 2025.