Netflix Subscribers Surge Amid Password Crackdown

Streaming giant Netflix has shrugged off investor concern at the saturated streaming market, after a tough few years following the pandemic boom.

Netflix in its latest financial report, pleased investors when it revealed that 13.1 million users had signed up for its service in the fourth quarter, which is its best growth rate since the start of the Covid-19 pandemic.

This comes as the streaming giant continues its password-sharing crackdown, but also satisfied its subscribers with a strong portfolio of streaming content, despite price rises in 2022.

Subscriber growth

For the fourth quarter of 2023 Netflix posted net income of $938m, up from just $55m in Q422.

There was equally good news on the sales side, as revenue rose to $8.8bn from $7.8bn in the same year-ago quarter.

“We believe there is plenty of room for growth ahead as streaming expands, and our north star remains the same: to thrill members with our entertainment,” said the firm. “If we can continue to improve Netflix faster than the competition, we’ll have an increasingly valuable business – for consumers, creators and shareholders.”

But the firm really pleased investors with a strong growth in paid subscribers, that rose 13.12 percent to 260 million, from 231 million in the same year-ago quarter.

This also beat the quarter’s estimates of 8.97 million subscribers.

This pushed the streaming pioneer’s shares trading at a more than two-year high on Wednesday.

Content performance

Netflix also highlighted that “despite a lot of competition for people’s time, we continue to improve our service and drive many times more viewing than any competitor other than YouTube.”

It pointed to viewing success with titles such as Berlin; Squid Game: The Challenge; Virgin River S5; and Selling Sunset S7; as well as blockbuster finales for Sex Education and The Crown.

Netflix also revealed it plans to spend as much as $17 billion on content this year.

Passwords, prices

The strong fourth quarter performance comes despite a challenging time in 2023 and 2022 for the firm.

Netflix had ended the legacy DVD service that had been running for the past 25 years, after its famous red-and-white envelopes made their final trip in September 2023.

Prior to that in May 2023, Netflix finally began its password-sharing crackdown in the United States and United Kingdom.

The popular streaming platform had in February last year said that password sharing by 100 million households was impacting its ability to invest in new TV and films, as it extended its crackdown into Canada, New Zealand, Portugal and Spain.

The password sharing crackdown has been expected, as the firm sought additional revenue streams in a saturated market impacted by multiple rival streaming services.

Netflix took action after it saw its subscriber numbers fall sharply in the first half of 2022.

It cut hundreds of jobs and raised subscription prices to cover increasing costs.

In November 2022, in a response to the cost of living crisis, Netflix introduced a cheaper ad-supported subscription plan costing £4.99 pm in 12 countries, including most of Europe, the UK and the US.