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Netflix gains more subscribers amid streaming wars

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 24 Jan 2024
Netflix has solidified its number one position in the streaming wars.
Netflix has solidified its number one position in the streaming wars.

Netflix has solidified its number one position in the streaming wars after posting strong fourth quarter 2023 financial results.

According to the results published yesterday, Netflix added 13.1 million subscribers in the fourth quarter, bringing the total number of subscribers to 260 million.

The company says this is its biggest fourth quarter subscriber growth.

Netflix posted revenue of $8.83 billion in the quarter, a 12.5% increase compared to the same period last year.

This, after Netflix discontinued password sharing in South Africa and additional markets, turning service borrower household accounts into fully paying memberships.

Netflix’s competitors include Disney+, Amazon Prime Video, Apple TV, Hulu and HBO, among others.

“Our healthy top line growth reflects the benefits of paid sharing, our recent price changes and the strength of our underlying business driven by a strong slate,” it says in a statement.

“We enter 2024 with good momentum. We expect healthy double-digit revenue growth for the full year 2024 on a foreign exchange neutral basis, driven by continued membership growth.

“We’ll also continue to invest in and build our ads business; we expect strong growth in 2024 but off a small base, so it’s not yet a primary driver of our overall revenue growth. Our aim is to make ads a more substantial revenue stream that contributes to sustained, healthy revenue growth in 2025 and beyond.”

Commenting on the results, market research firm Parrot Analytics says in 2023, Netflix expanded its lead over the competition in global subscribers, consistent profitably, and the intangible ability to galvanise audiences in a way no other subscription video-on-demand can.

It notes that in Q4 2023, Netflix grew its demand share for original series with global and US audiences for the first time in over four years, since before Disney+ and Apple TV+ launched.

Parrot Analytics says from a financial standpoint, Netflix must provide a new growth strategy once the effects of its password crackdown wear off, and reveal how the ad tier is impacting average revenue per user.

“Revenue and profit are the name of the game and with Netflix’s gaming ambitions currently cost-free and no production shutdowns looming on the horizon to help with free cash flow, Wall Street will need additional growth narratives to keep the bears and bulls satiated,” says the entertainment research firm.

According to Parrot Analytics, between the beginning of 2020 and Q4 2023, there has been a 261% increase in the global supply of streaming original titles, as leading companies have prioritised direct-to-consumer platforms and chased Netflix’s business model.

However, the rate of growth for streaming original titles steadily slowed down in 2023, shrinking in all four quarters of the year, it adds.

Before 2023, there had not been more than one quarter in a row of a shrinking growth rate in global streaming original supply.

“In other words, streamers are still making new shows, just not at the same clip as they used to. This slowdown is a combination of both major companies shifting business models and cutting back, and the sharper drop-offs in Q3 and Q4 are a clear result of the Hollywood labour strikes.”