After a decline in subscriptions and valuation in 2022, Netflix made a surprising resurgence during the last quarter of 2022.
Key Details
- The company gained 7.7 million new subscribers at the end of last year, surpassing its own estimate of 4.5 million new paid viewers.
- As membership growth gains traction, the streaming service says it will now turn its focus to increasing profitability.
- Netflix has already started its plan to increase profitability by introducing ads to one of its subscription plans.
- Next, the streaming giant plans to stop users from sharing account passwords with one another.
Why it’s news
Earnings in the last quarter weren’t as impressive as Netflix had hoped, though it brought in a revenue of $7.85 billion. The sharp increase in subscribers is a hopeful sign for the struggling company.
In addition to better-than-expected results, Netflix also announced a change in company leadership. CEO and founder Reed Hastings will be stepping down from his current role and serving as executive chairman. Ted Sarandos and Greg Peters will be taking over as co-CEOs.
Netflix’s stock is up approximately 15% since the start of the year. The company’s shares have traditionally been more valuable, but Netflix is still recovering from a severe interruption to its previously rapid growth.
Backing up a bit
After trying to avoid it for years, Netflix has launched its subscription tier that comes at a lower cost and includes advertisements.
Netflix launched its new subscription tier, Basic With Ads, in November. Users can pay a lower monthly fee but will see ads during the programming.
The new subscription tier comes at a time when Netflix desperately needs to increase its subscriber count and overall revenue.
With serious competition in the picture, Netflix has been struggling to keep subscribers interested. Now, Netflix isn’t just competing for streaming space, it’s also competing with various industries—from grocery stores to hotels—that are entering the advertising space.