Netflix’s subscriber numbers are better than expected
After a bumpy 2022, looks like the number one video streaming platform is getting back on its feet. Q4 showed a significant increase in subscriber numbers thanks to the platform’s new ad-tier plan. Read on to learn more!
by Aline Barbosa
The streaming giant nearly closed in on 8 million new subs during Q4.
Netflix caught Wall Street experts by surprise by revealing that it increased its subscriber numbers by more than 3 million of what they were expecting in the fourth quarter. The news helped send the streamer’s shares up, even after a big earnings miss.
During its Q4 disclosure, Netflix also announced that co-CEO Reed Hastings is stepping down and transitioning to executive chairman. The company’s chief operating officer, Greg Peters, is taking the role as co-CEO along with Ted Sarandos.
Netflix’s Q4 results are as it follows:
- EPS: 12 cents and not 45 cents per share, as predicted.
- Revenue: $7.85 billion vs. $7.85 billion.
- Paid net subscribers: 7.66 million adds vs. 4.57 million, as expected by Wall Street.
Even though the company’s EPS was missed due to a loss related to euro debt, its margins were still above Wall Street’s expectations at 7%. Also, the devaluation of the U.S. dollar when compared to euro in Q4 is not considered an operational loss.
This is the first time that the company included its ad-supported tier in its quarterly earning results. Netflix launched the cheaper plan back in November 2022 and since then had an increase in subscriber numbers.
However, the streaming platform has not disclosed exactly how many new members are from users that opted for their less expensive plan.
Netflix wants to increase its subscriber numbers even more in 2023
During Netflix’s earnings call, the company said the engagement people had with its new tier is comparable to the regular subscription plans. They also noted that there haven’t been a notable number of people switching plans either.
What that means is that those who subscribe to their premium plans are not really bumping down to the ad-supported tier. Spencer Neumann, Netflix’s chief financial officer, was quick to point out during the pre-recorded call that they would not venture into this new business if it couldn’t become a large portion of their business.
He added that the company is over $30 billion in revenue in 2022, and they wouldn’t venture into a new business model if they didn’t think it could reach at least 10% of their revenue.
During Q4, the company said it was optimistic about its subscriber numbers and new ad business. From now on, they will not provide subscriber guidance (though they will keep reporting those numbers in quarterly reports).
In a recent statement, the company said 2022 was a rough year that had a rocky start and a brighter end. With its new subscriber numbers amongst other positive factors, they believe they have now a clear path to increase their revenue.
The idea is to continue to improve all aspects of their platform. They also want to launch the paid sharing model, and build their ads offering. They finish by saying the company’s north star is to please their members and to build even greater revenue over time.
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