Netflix’s Q4 subscribers spike, longtime CEO passes the baton

Netflix’s subscriber growth is picking up again, which is an early sign that the move to include ads in a cheaper version of the video streaming service is helping to fend off stiffer competition. and attract cost-conscious customers struggling with inflation.

The company on Thursday revealed an increase of 7.7 million subscribers between October and December, a period that includes the launch of an ad-supported option for $7 per month. — less than half of the most popular ad-free plan. Performance following subscriber growth beats analysts’ modest expectations in the period from July to September after the second quarter in a row Netflix lost customers.

After regaining momentum, Netflix also announced that co-founder Reed Hastings will step down as co-CEO, completing a transition that began in July 2020 with the appointment of a founding director. presented Ted Sarandos as Co-CEO. Greg Peters, Netflix Managing directorwill join Sarandos as co-CEO while Hastings becomes executive chairman.

Hastings, 62, has served as CEO of Netflix for more than 20 years after taking over the role from friend and company co-founder Marc Randolph in the late 1990s.

In a blog postHastings said he, Sarandos and Peters “have all learned to bring out the best in each other. I look forward to working with them in this role for many years to come.”

Netflix’s increase in subscribers doesn’t boost profits, largely because a strong dollar affects international results. The Los Gatos, California company earned $55.3 million, or 12 cents per share, in the fourth quarter, down 91% from the year-ago period. Revenue rose 2% year over year to $7.85 billion, a modest increase that suggests some persistent subscribers may have switched from a more expensive plan to an ad-supported option that lower price.

Earnings fell below analysts’ expectations, who shape investors’ expectations. But investors seem to be more focused on the much higher subscriber count than anticipated. Shares of Netflix rose 6% in extended trading to $335.01. The stock price has doubled from a five-year low of $162.71 hit last May, but is still far below its all-time high near $701 in November 2021. .

Previous years subscriber recession unprecedented since Netflix split its streaming service and DVD-by-mail service in 2011, prompting management to accept advertising for the first time. The company is now preparing to crack down on rampant password sharing that has allowed about 100 million people worldwide to watch popular shows like “The Crown” and “Stranger Things” for free.

Powered by a boost during the holiday season, Netflix now boasts nearly 231 million subscribers worldwide—more than any other competitor in the increasingly crowded video streaming competition that includes competitors like Amazon, Hulu, Google’s YouTube, Walt Disney Co. and Apple, the richest in the world The company.

Now, when consumers have so many choices but only so much discretionary income to spend, Netflix admits it will be difficult to attract more customers as it did in the past. Its growth peaked during the early stages of the pandemic when the video streaming service added more than 36 million subscribers in 2020 while most people stayed home. By comparison, Netflix amassed less than 9 million subscribers in the whole of last year.

The slowdown has caused Netflix to stop its long-standing practice of predicting how many subscribers it expects to gain from quarter to quarter, an attempt to ease investors’ focus on that number. Instead, Netflix is ​​focusing more on revenue and profit growth, a goal that is expected to be supported as more money comes in from ad sales.

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