Netflix soars to 230 million subscribers, co-founder steps down

Web Desk

20th Jan, 2023. 08:33 am
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Netflix reports more than 230 million users worldwide at the end of 2013.
The company claims to have attracted 7.7 million new subscribers in just three months.
Co-founder Reed Hastings steps down as CEO after 25 years in charge.
Some number of new subscribers likely came in on Netflix’s ad-supported tier.

Netflix, the US streaming giant, reported on Thursday that it had more than 230 million users worldwide at the end of last year, above analysts’ projections as popular shows like “Wednesday” and “Harry & Meghan” attracted new viewers.

In a letter touting record fourth-quarter earnings, the business claimed that “2022 was a tough year, with a bumpy start but a brighter finish.”

In addition, Netflix revealed that co-founder Reed Hastings was stepping down from his position as CEO after 25 years in charge, during which time the business grew from a DVD rental service to a behemoth in the entertainment industry.

Ted Sarandos, who has been the face of Netflix in Hollywood and was already appointed co-CEO, and Greg Peters, the company’s chief operating officer, were given leadership of Netflix by Hastings.

“It feels like yesterday was our IPO; we were covered in red envelopes,” Hastings said during an earnings call.

“Hopefully, some of you have held the stock for all 21 years.”

Early in 2002, Netflix went public, with shares initially trading for $15 each.

After the presentation of the earnings results, shares of the streaming television service increased by about 7% to $337.31.

Hastings noted in a blog post that the Netflix board has been talking about succession planning for many years, joking that “even founders need to evolve!”

He said that he would hold the newly created position of executive chairman, stating that founders of tech giants frequently take on this role, citing Bill Gates of Microsoft and Jeff Bezos of Amazon as examples.

The announcement of the change of guard coincided with Netflix reporting increased subscribers that far above even the most optimistic predictions.

The streaming behemoth claimed to have attracted 7.7 million new subscribers in just three months, raising the total number of Netflix subscribers worldwide to 230 million.

The “Addams Family” spinoff “Wednesday” was part of a successful slate of new programming that Netflix recognised as being the third most watched show in the company’s history.

According to Netflix, “Glass Onion: A Knives Out Mystery” starring Daniel Craig and the royal tell-all documentary “Harry & Meghan” both performed well.

“This is in stark contrast to the first half of the year. Creating the next biggest blockbuster drives subscriber, “Paolo Pescatore, a media and technology analyst.

New rivals

As customers reduced their leisure expenditure in response to rising inflation and an unsteady economy, the new titles helped draw users to a new, more affordable “Basic with Ads” subscription.

The revenue for the three-month period from October to December, $7.85 billion, was in line with forecasts.

Netflix maintains that income should be the primary criterion for gauging the health of the firm rather than the number of new subscribers.

“What may be getting lost in the mix is that some number of new subscribers — we don’t know how many — likely came in on Netflix’s ad-supported tier,” said Insider Intelligence principal analyst Paul Verna.

“That means, most likely, lower average revenue per subscriber, which is a measure Wall Street will be paying more attention to as Netflix’s ad businesses scales up,” he said.

This year, Netflix wants to “nudge” viewers who use subscriber-shared passwords to pay their own way.

“We have high confidence in our ability to accelerate revenue throughout the course of the year as we scale ads and we launch paid sharing (of accounts),” said Netflix chief financial officer Spencer Neumann.

Deep-pocketed competitors like Disney+, which also offers an ad-based subscription, are a serious threat to Netflix.

But despite the difficulties, Netflix is one of the few internet behemoths that has won Wall Street’s faith, with its share price rising by about 50% over the previous six months.

As businesses lay off workers and make cost reductions following a big recruiting and spending spree at the height of the coronavirus outbreak, Disney and other tech giants have taken a beating on the stock markets.