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Netflix gains more than 13 million subscribers in the fourth quarter

By Samantha Delouya, CNN

(CNN) — Netflix announced a major boost in sign-ups in the fourth quarter on Tuesday. The company added more than 13 million subscribers for the quarter, compared to Wall Street’s expectation of 8.7 million.

While Netflix added 1.2 million paid subscribers in the fourth quarter in the US, much of the strongest subscriber growth came internationally from Europe and Asia.

Overall, Netflix now has a record number of subscribers at 260.3 million.

And investors seem to be cheering: Netflix’s stock jumped more than 7% in after-hours trading Tuesday.

Password sharing and Netflix’s foray into ads

In the past year, the company implemented several initiatives aimed at adding subscribers, including a password-sharing crackdown that pushed password “borrowers” into creating their own subscriptions and introducing an advertising-supported subscription tier for $6.99.

The plan is significantly cheaper than Netflix’s ad-free offerings, at $6.99 per month in the US. In October, Netflix said it raised the price of its premium ad-free plan to $22.99 while its one-stream basic plan rose to $11.99.

Earlier this month, Amy Reinhard, Netflix’s president of advertising, said Netflix’s ad tier hit more than 23 million monthly memberships.

On Tuesday, Netflix sounded a positive note on its growing advertising business.

On the company’s fourth-quarter earnings call, Netflix co-CEO Greg Peters said he had high hopes for Netflix’s ability to snatch ad dollars from traditional TV competitors.

“We know ad dollars follow engagement. We’ve got the most engaged audience so we believe we’re well positioned to capture some of that ad spend that shifts from linear to streaming,” he said.

In Tuesday letter to shareholders, Netflix declared its password-sharing crackdown a success, as well.

“We believe we’ve successfully addressed account sharing, ensuring that when people enjoy Netflix they pay for the service too,” it said.

Netflix finished 2023 with 12% revenue growth, up from 6% growth in 2022. The company posted revenue of $8.8 billion for the fourth quarter but came short of Wall Street’s expectations for earnings-per-share at $2.11, according to Factset estimates.

Gaming, sports and entertainment

Last year was turbulent for the entertainment industry as both writers and actors went on strike for several months. Netflix, however, has recently made investments to diversify its business outside of scripted programming.

Looking ahead to 2024, Netflix said it sees “big opportunities” to further improve its core TV and film content, while also broadening its offering into gaming, live entertainment and sports programming.

Earlier on Tuesday, Netflix announced that it had acquired the exclusive rights to air “WWE Raw” live, currently seen on Comcast’s USA cable network. The 10-year deal is valued at more than $5 billion, according to a company filing.

On Netflix’s earnings call Tuesday, co-CEO Ted Sarandos said the WWE deal falls “right in the sweet spot of our sports business, which is the drama of sport.”

“Think of this as 52 weeks of live programming every year. It feeds our desire to expand our live event programming,” he said. “This should also add some fuel to our new and growing ad business.”

In November, Netflix aired its first-ever live sports event, called “The Netflix Cup,” a crossover competition between Formula 1 drivers and professional golfers.

The company will also experiment with live awards show content, exclusively screening the Screen Actors Guild Awards in late-February.

But in a letter to shareholders on Tuesday, Netflix shot down any speculation that it plans to venture into the traditional cable TV space, which has experienced declines as more TV-watchers cut the cord and switch to streaming.

“We’re not interested in acquiring linear assets,” the company said in its letter.

The fourth quarter also saw a big expansion in Netflix’s video game offering. In December, Netflix launched three mobile-friendly games from Grand Theft Auto, one of the best selling video game franchises ever.

“We’re stoked by the performance of GTA,” Peters said Tuesday. “The biggest download and engagement numbers that we’ve seen so far. We were in the top mobile game downloads for several weeks, which shows it was not only big for us, but big numbers for mobile gaming in general.”

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