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Netflix earnings show streaming giant is adding customers once again

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Netflix’s subscriber numbers are soaring again, and the company’s shift to including advertising in its cheaper versions of its video-streaming service has helped it compete against tougher competition and attract cost-conscious customers to grapple with inflation. It provides early indications that

The company revealed Thursday that it added 7.7 million subscribers in the October-December period. This includes the debut of an ad-supported option for $7 per month. That’s less than half the price of our most popular commercial-free plan. The performance follows Netflix’s second straight quarter of customer losses as he followed an increase in subscribers that exceeded analysts’ modest expectations over the period from July to September.

Rebounding, Netflix announced that co-founder Reed Hastings would relinquish his co-CEO title, appointing head of programming Ted Sarandos as co-CEO in July 2020 to complete the transition. Netflix Chief Operating Officer Greg Peters will join Sarandos as Co-CEO, with Hastings becoming Executive Chairman.

Hastings, 62, was Netflix’s CEO for more than two decades after taking over the role from friend and fellow company co-founder Mark Randolph in the late 1990s.

Losing Hastings as co-CEO “leaves some big shoes for me and Greg to fill,” Sarandos said on a conference call late Thursday. It has four legs for

Upon passing the CEO baton, Hastings said Sarandos and Peters were “prepared” to succeed him. “Both of them have great talent and talent,” Hastings said on a conference call. “Frankly, more and more, they’re already leading the company.”

new strategy

Insider Intelligence analyst Paul Verna said the new leadership reflects Netflix’s evolution from its roots as a technology company led by Hastings’ mathematical genius to an entertainment service led by Sarandos and Peters, who have long negotiated with Hollywood studios. I interpreted it as one more step. Oversee the development of advertising.

“The current shift puts advertising at the center of the picture alongside content,” said Verna.

Hub Research analyst David Tice, who oversees the company, said the subscriber growth was a pleasant surprise, but relatively flat revenue growth suggests the company still has growth issues. It suggests that you have

“I think they surprised everyone with the amount… they added subscribers, but on the other hand they didn’t really say where they were coming from,” he told CBC News in an interview.

Most of the new customers likely came from the lowest tier, he believes, and the company likely lost some of the higher-priced customers who downgraded their accounts.

“All these new subscribers aren’t really adding anything in terms of revenue,” he said.

Netflix’s subscriber growth didn’t boost profits. This was largely due to the strong dollar weighing on international results. The Los Gatos, Calif.-based company posted earnings of US$55.3 million, or 12 cents per share, in the fourth quarter, down 91% from the year-ago quarter. Earnings increased 2% from the previous year to his $7.85 billion. This suggests that some continuing subscribers may have downgraded from the more expensive plans to the lower-priced ad-supported options.

Watch | Why More and More Canadians Are Canceling Streaming Subscriptions:

Streaming subscription cancellations are on the rise

A study by the Angus Reid Institute found that one in three Canadians canceled their subscription to a streaming service in the past six months.

Earnings fell short of analyst expectations shaping investor expectations. Investors, however, appear to be eyeing a much higher subscriber growth than expected. Netflix shares rose nearly 7% in premarket trading on Friday, just above $337 a share. The stock has doubled from a five-year low of $162.71 in May last year, but is still well below its all-time high of nearly $701 in November 2021.

Last year’s unprecedented subscriber slump since Netflix separated its streaming and DVD-by-mail services in 2011 prompted management to embrace advertising for the first time. The company is now preparing to crack down on the rampant sharing of passwords that allow an estimated 100 million people worldwide to watch popular shows such as: crown When stranger things For free.

Boosted by the holiday season, Netflix now boasts approximately 231 million subscribers worldwide. Richest company in the world.

With so much disposable income and so many choices for consumers to spend, Netflix admits it will be difficult to attract as many customers as it has in the past. That growth peaked during the first phase of the pandemic, when he surpassed 36 million subscribers to the video streaming service in 2020, but most people were stuck at home. By comparison, Netflix had less than 9 million subscribers last year.

The slowdown has prompted Netflix to suspend its long-standing practice of predicting how many subscribers it expects to get from one quarter to the next, in an attempt to dampen investor interest in that number. Instead, Netflix is ​​more focused on revenue and profit growth. This goal is likely supported by more capital inflows from advertising sales.

Watch | Why ad-supported free TV is booming again:

Free and ad-supported TV offers an alternative to streaming

As consumers forego subscriptions and seek alternative ways to watch news and entertainment, free, ad-supported streaming television (FAST) services offer an alternative, and the CBC announced this week that its own FAST I am launching a channel.

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