Netflix (NFLX.O) has reaffirmed its dominance in the streaming market, reporting a record number of new subscribers for the holiday quarter, marking a major milestone in its growth trajectory. The company added 18.9 million new subscribers in Q4, bringing its total global subscriber base to nearly 302 million. This performance solidifies its position as the leader in the streaming video space, far outpacing its Hollywood rivals.
Price Hikes and Focus on Content
To capitalize on its growing popularity, Netflix raised prices in several markets, including the U.S., Canada, Portugal, and Argentina, to fund its continued investment in content. The ad-supported tier in the U.S. now costs $7.99 per month, up from $6.99, while the premium package is priced at $24.99, a 9% increase from its previous price.
Despite these hikes, investors responded positively, sending Netflix’s stock up by 13% in after-hours trading, adding nearly $50 billion to its market value. Over the past year, Netflix’s stock has surged by more than 77%, significantly outperforming the S&P 500’s 24% gain.
Content and Live Streaming Driving Subscriber Growth
Netflix’s focus on high-quality, diverse content continues to pay off, with the company reporting that its fourth-quarter programming slate exceeded expectations. The second season of “Squid Game” was particularly popular, and live events have also become a key driver of viewership. For example, the boxing match between Jake Paul and Mike Tyson in November garnered 65 million streams, and the NFL games on Christmas Day, featuring Beyoncé’s halftime performance, attracted 30 million global viewers.
Mike Proulx, Director at Forrester Research, emphasized that quality content is the primary factor behind Netflix’s subscriber surge, calling the company’s attention to content a major contributor to its strong performance.
Ad-Supported Tier and Live Events
Netflix is continuing to expand its investment in live-streamed events. In addition to popular sports and entertainment events, it has secured broadcasting rights for the 2027 and 2031 FIFA Women’s World Cup, underscoring its strategy to focus on special-event programming rather than traditional sports packages. This shift is attractive to advertisers, as live events tend to attract real-time viewership, which is highly valued for ad revenue.
Co-CEO Greg Peters highlighted that the ad-supported version of Netflix has been growing rapidly, with 55% of new sign-ups in available countries coming from this tier. Revenue from ads exceeded expectations in Q4, and Netflix expects to double its ad revenue again this year. Analyst Tim Nollen forecasts that ad revenue will increase to $2 billion in 2024, driven by more sign-ups to the ad-supported tier and improvements in the company’s advertising technology.
Financial Performance and Future Projections
In terms of financials, Netflix reported per-share earnings of $4.27 for the quarter, surpassing Wall Street’s forecast of $4.20. Its annual operating income also exceeded $10 billion for the first time. Revenue rose 16% year-over-year to $10.2 billion, surpassing analyst estimates of $10.1 billion.
Looking ahead, Netflix has revised its guidance for 2025, projecting revenue between $43.5 billion and $44.5 billion, a half-billion dollars higher than its previous forecast. The company also approved an additional $15 billion for stock buybacks, bringing its total repurchase authorization to $17.1 billion.
Shifting Focus Beyond Subscriber Growth
Notably, this will be the last quarter Netflix reports subscriber additions, as it shifts focus to other performance metrics such as revenue and profit. This change reflects the slowing pace of subscriber growth, a trend that many streaming companies are facing as the market matures. Nonetheless, Netflix’s ongoing investment in high-quality content, live events, and its ad-supported service positions it well for continued growth in the competitive streaming landscape.
Overall, Netflix’s fourth-quarter results underscore its strong content strategy and growing revenue from live events and advertising, solidifying its leadership in the streaming market.
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