Netflix adds 18.9 million subscribers in holiday quarter, raises prices for most service plans
Netflix Inc.added 18.9 million subscribers in its holiday quarter, blowing past Wall Street’s forecasts, with live sporting events and the return of its popular South Korean series Squid Game attracting a record number of new customers, the company reported on Tuesday.
The streaming giant said it will increase prices for most service plans in the U.S., Canada, Portugal and Argentina as it spends more on programming. In the U.S., the basic service with ads would increase by US$1 a month to US$7.99, a 14-per-cent price hike, while the premium package will cost US$24.99, up 9 per cent from existing pricing.
The streaming giant says the monthly cost of its cheapest offering in Canada – the standard plan with ads – is going up by $2 to $7.99 a month.
The standard plan without ads will increase by $2.50 a month to $18.99 while the premium plan jumps $3 a month to $23.99.
There’s no change in the fees to add an extra member.
The new prices take effect immediately for new subscribers, while existing members will see the change on their next bill.
A letter to shareholders says the increase is due to programming investments.
Investors reacted enthusiastically to the results, sending Netflix’s stock surging about 13 per cent in extended trade, lifting its stock market value by almost US$50-billion. Over the past year, Netflix shares have gained more than 77 per cent, outpacing the S&P 500’s 24-per-cent rise.
Netflix said its fourth-quarter programming slate surpassed its own expectations, with the Jake Paul vs. Mike Tyson boxing match becoming the most-streamed sporting event and the two National Football League games on Christmas Day delivering two of the most-streamed competitions in league history.
The service also benefited from the second season of its dystopian survival thriller Squid Game, which the company said is on track to become one of its most-watched original series. The company has the lowest rate of cancellations among the subscription streaming services, with a churn rate of 1.8 per cent in December, according to researcher Antenna.
“Netflix reaffirms its leadership position and is absolutely running away in the streaming market,” said Paolo Pescatore of PP Foresight. “It is now flexing its muscles by adjusting prices given its far stronger and diversified programming slate compared to rivals.”
The company said it has shaken off the effects of COVID-19 and the Hollywood writers’ and actors’ strikes, and is delivering returning seasons of its most popular shows, including Wednesday, a series based on a character from the Addams Family entertainment franchise, and the supernatural Stranger Things.
It will also deliver more live events, including weekly instalments of WWE Monday Night Raw wrestling, and films such as Wake Up Dead Man: A Knives Out Mystery starring Daniel Craig as the detective Benoit Blanc, and a new take on Frankenstein from Academy Award-winning director Guillermo del Toro.
Netflix also secured the rights for the FIFA Women’s World Cup in 2027 and 2031, a deal which it says illustrates its strategy to deliver special-events programming, rather than regular season sports packages.
Live events help attract brand marketers, fuelling Netflix’s advertising strategy. The company said the ad-supported version of its service accounts for 55 per cent of its new sign-ups in countries where it is available.
Macquarie Equity Research analyst Tim Nollen predicted that ad revenue will increase to US$2-billion in this year, as more people sign up for the company’s advertising-supported tier and Netflix’s advertising technology matures. Live events will continue to drive sign-ups, he wrote in an investor note published prior to Netflix’s earnings report.
This quarter will also mark the last time Netflix reports subscriber additions, as the company emphasizes other performance metrics, including revenue and profit – a change analysts attribute to slowing subscriber growth.
The company reported per-share earnings of US$4.27, beating Wall Street’s forecast of US$4.20 per share, according to an average of projections from 34 analysts. Annual operating income exceeded US$10-billion for the first time in the company’s history.
Revenue rose 16 per cent over the same time a year ago, to US$10.2-billion, compared with Wall Street’s estimates of US$10.1-billion for the quarter, according to LSEG.
“We enter 2025 with strong momentum,” Netflix said in its note to investors, saying it added a record 41 million subscribers in 2024 and reaccelerated growth.
The company revised its guidance, projecting revenue of US$43.5-billion to US$44.5-billion in 2025, an increase of a half-billion dollars over the prior forecast. The updated guidance reflects improved business fundamentals, the company said.
Netflix’s board also approved an incremental US$15-billion to repurchase shares, which brings the total buyback authorization to US$17.1-billion.
This article was first reported by Reuters
