Netflix Soars on Record Subscriber Growth, Price Hikes, and Live Events

Netflix's strong performance in the fourth quarter, fueled by record subscriber additions and a successful live event strategy, propelled the company's stock price higher and solidified its dominance in the streaming market, as reported by Reuters.

The company added 18.9 million subscribers in the final quarter of 2023, bringing its global subscriber base to nearly 302 million. This impressive growth surpasses its Hollywood competitors by a significant margin. To capitalize on this momentum, Netflix implemented price increases in the U.S., Canada, Portugal, and Argentina, citing increased programming costs. In the U.S., the ad-supported service now costs $7.99 per month, while the premium package saw a 9% price hike to $24.99.

Investors responded positively to these results, sending Netflix's stock soaring by 13% in after-hours trading. Over the past year, Netflix shares have gained more than 77%, significantly outperforming the S&P 500's 24% increase.

"Netflix reaffirms its leadership position and is absolutely running away in the streaming market," said Paolo Pescatore of PP Foresight, to Reuters. "It is now flexing its muscles by adjusting prices given its far stronger and diversified programming slate compared to rivals."

Netflix's strategic investments in live-streamed events are proving particularly effective in attracting viewers. The boxing match between Jake Paul and Mike Tyson in November garnered 65 million streams, while two NFL games on Christmas Day, including one featuring Beyoncé's halftime performance, averaged 30 million global viewers, ranking among the most-streamed sporting events in league history.

"To state the obvious, it’s content that drives users to streaming services," said Forrester Research Director Mike Proulx. "With the biggest bump in subscribers ever, Netflix’s attention to quality content is the reason for an overall strong year and fourth quarter."

Netflix is further expanding its live event offerings, including weekly broadcasts of WWE "Monday Night Raw" wrestling and securing the rights for the FIFA Women's World Cup in 2027 and 2031. These events are proving particularly attractive to advertisers due to their ability to engage real-time audiences.

"We exceeded our ads revenue target in the fourth quarter," said Netflix Co-CEO Greg Peters, adding, "We doubled our ads revenue year over year last year. We expect to double it again this year."

Netflix's ad-supported service is proving successful, accounting for 55% of new sign-ups in countries where it is available. Macquarie Equity Research analyst Tim Nollen predicts that ad revenue will reach $2 billion this year as more people subscribe to the ad-supported tier and Netflix's advertising technology matures.

This quarter marks the last time Netflix will report subscriber additions. The company is shifting its focus to other key performance indicators such as revenue and profit, a change analysts attribute to slowing subscriber growth. The company reported earnings per share of $4.27, exceeding Wall Street's forecast of $4.20, and its annual operating income surpassed $10 billion for the first time. Revenue grew by 16%, outperforming expectations, although the jump in subscribers did not translate to an equal spike in revenue due to the staggered nature of new sign-ups throughout the quarter.