New Ad-Supported Series Is a Hit

New Ad-Supported Series Is a Hit

Netflix may regret waiting so long to roll out an ad-supported series. Based on its performance in the fourth quarter, the new service is outstanding.

Reporting its fourth quarter earnings on Thursday, Netflix
It said it added 7.7 million subscribers, well above expectations for the streaming service and triple the number it added in the third quarter. That brought his total number to 230.8 million subscribers worldwide.

The streamer credited some of that accelerated growth to the introduction of a lower-priced, ad-supported series in November, something the company had long resisted under Co-CEO Reed Hastings.

It’s tempting to read something into that, but around the same time Netflix released its earnings data, Hastings said he’s stepping down from running the company he co-founded and transitioning to executive chairman. There’s certainly a lot of speculation as to why (Hastings said in a blog post announcing it was in the works for a while), and his lack of publicity could be viewed as seemingly misplaced.

But back to the numbers: Netflix had said before the earnings call, likely beating expectations, that it didn’t expect the ad-supported series to have a significant impact on the fourth quarter. A gain of 4.5 million subscribers is projected. The ad-supported tier clearly contributed to gains, though Netflix declined to say exactly how many new subscribers the ad-supported tier had.

Still, a report released today by Ampere Analysis says that daily subscriptions increased by more than 50 percent during the first few days that the ad-supported series was available. Netflix had its best sign-up rate during that time (November 3-5) since the pandemic began in April 2020. Nearly 10 percent of new customer signups are now for the ad-supported series, which d find the report.

The bigger numbers came at a time when the streamer needed a shot in the arm.

Netflix lost subscribers in the first and second quarters of last year before recovering slightly in the third quarter. Everyone had a theory about the declines, the first in a decade for the longtime streaming leader, which (depending on how hard you crunched the numbers) has fallen behind streaming service Disney+ in total subscribers — though Disney also includes ESPN+ and Hulu in those subs, so the claim is murky.

Some have blamed Netflix’s steep price hike for the subscriber decline. Others cited inflated gains during COVID that may not last when the greenbacks rose. The streamer claimed that password sharing was eating into subscribers, and promised to crack down on that in 2023.

As for Netflix’s other numbers, it fell a bit short on revenue, with $7.85 billion vs. a projected $8.1 billion. It was the slowest growth since 2002, up 1.9% from last year. Earnings per share were also well below expectations. Netflix had said in its third-quarter earnings release that it would focus more on revenue as its top metric going forward rather than subscribers — but after today’s results, you’d expect the company to walk away from that a bit.

Among other highlights of the earnings release, Netflix said Wednesday that its No. 3 of all time, and Glass Onion: A Knives Out Mystery It is the fourth most popular film of all time. And the documentary Harry & Meghan It is the second class doc of all time on the service, benefiting from the release of Prince Harry’s popular souvenir, spare.

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