Netflix posts strong growth for 2023 as ad-supported tier gains momentum
Netflix has released its Q4 results for 2023, calendar year results, demonstrating a 12.5% year-on-year (YoY) growth in revenue due largely to a stronger pricing model and the growth of its ad-supported subscription.
Since launching at the end of 2022, the streaming service’s ad supported model has been the subject of wide-spread skepticism from the local advertising industry, with questions raised about the channel’s audience reach.
However, the low-priced streaming tier appears to be a hit with consumers, increasing its membership by 70% globally in Q4 2023, compared to previous quarter. While Netflix has not disclosed the number of ad-supported memberships, it reported that the ad-supported tier now accounts for 40% of all new Netflix sign-ups in its advertising markets.
Netflix is now planning to retire its basic plan in the second quarter of this year, starting with the UK and Canada.
Overall, the company welcomed 13 million new streaming memberships in Q4, up 12.8% YoY. In the APAC market however, YoY growth was down 17%, with only 1.8 million new sign ups. Netflix finished the year with a total of 260 million memberships globally and 38 million in APAC.
In terms of revenue, a 12.5% YoY increase took Netflix to A$13.426 billion (US$8.833 billion) in revenue for Q4, and A$51.269 billion (US$33.723 billion) over the 12 months to 31 December.
As well as the company’s growing advertising-driven revenue stream, it’s strong performance last year might be attributed to a number monetisation initiatives brought forward by the company last year, including the roll out of paid sharing.
Looking to 2024, the company told shareholder it would be focusing on increasing value to members by expanding its content offering, scaling the ads business and deepening connection with ‘fans’ through marketing and experiential activations.
The results suggest that Netflix has been minimally affected by last year’s Hollywood strikes, which took a significant toll on the entertainment industry in the US.
While several titles have been pushed back in light of the strikes, the streamer has previewed a full slate for 2024, with the return of the likes of Bridgerton, Squid Gam, Love Blind and Drive to Survive, alongside a suite of new titles.
Netflix will also expand its live-events coverage, with the coming SAG Awards and an exhibition tennis match between Rafael Nadal and Carlos Alcaraz, titled the Netflix Slam.
Notably, a new partnership with WWE may also signal a more substantial investment into sports, with Netflix landing the exclusive rights to WWE’s Raw in the US, Canada, UK and Latin America from January 2025. The partnership will also see Netflix become home to WWE’s international titles and live sporting events.
The results mark the end of the first year under the joint leadership of co-CEOS Ted Sarandos and Greg Peters, with Peters, formally chief operating officer, replacing founder Reed Hastings who will remain in the business as executive chairman.
In December Netflix published its first ever bi-annual report on engagement, revealing its programs for January to June 2023, ranked in order of total viewing hours.
The report promises to provide transparency to advertisers and the broader public, but did not go as far as breaking down viewership by region.
During a media call in December Sarandos said that Netflix had inadvertently created “an atmosphere of distrust” in its historic secrecy around its viewing figures.
“We don’t intend to do country-level lists because it’s an enormous amount of competitive intelligence we’d be putting out there,” he added.
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