Netflix soars to 230mln subscribers, co-founder steps down
US streaming giant Netflix ended last year with more than 230 million subscribers worldwide, it said on Thursday, beating analysts’ expectations as hits such as “Wednesday” and “Harry & Meghan” attracted new viewers.
“2022 has been a tough year, with a bumpy start but a brighter end,” the company said in a letter announcing bumper fourth-quarter results.
Netflix also announced that co-founder Reed Hastings is stepping down as CEO, ending a 25-year leadership that saw the company grow from a DVD rental service by mail to an entertainment juggernaut.
Hastings ceded control of Netflix to his two longtime associates, COO Greg Peters and Ted Sarandos, who served as the face of Netflix in Hollywood and had previously been named co-CEO.
“It feels like yesterday was our IPO; we were covered in red envelopes,” Hastings said on an earnings call.
“I hope some of you have held the stock for 21 years.”
Netflix became a publicly traded company in early 2002 at an opening price of $15 per share.
Shares of the streaming TV service rose nearly 7% to $337.31 in aftermarket trading following the release of earnings figures.
The Netflix board has been discussing succession planning for many years, Hastings pointed out in a blog post, joking “even the founders need to evolve!”
He said he would take on the new role of executive chairman, noting it was a role tech giant founders often fill, using Amazon’s Jeff Bezos and Microsoft’s Bill Gates as examples.
The changing of the guard was announced as Netflix showed additional subscribers that exceeded even the most optimistic expectations.
The streaming giant said it attracted 7.7 million new members in three months, bringing global Netflix membership to 230 million.
Netflix praised a successful slate of new content that included horror-themed comedy ‘Wednesday’, saying the ‘Addams Family’ spin-off was the third most popular series in history. of the society.
The tell-all royal documentary “Harry & Meghan” also scored, Netflix said, along with “Glass Onion: A Knives Out Mystery” with Daniel Craig.
“It’s in stark contrast to the first half of the year. The creation of the next biggest blockbuster attracts subscribers,” said technology and media analyst Paolo Pescatore.
– New rivals –
The new titles helped lure users to a new, cheaper “Basic with Ads” subscription as consumers cut back on entertainment spending amid soaring inflation and an uncertain economy.
Revenue for October through December, at $7.85 billion, was in line with estimates.
Netflix insists that counting new users is no longer the most important yardstick to gauge the health of the business and that revenue should instead be the primary metric.
“What may get lost in the mix is that a number of new subscribers – we don’t know how many – likely arrived on Netflix’s ad-supported tier,” said Paul Verna, senior analyst at Netflix. ‘Insider Intelligence.
“That most likely means a decline in average revenue per subscriber, a metric that Wall Street will pay more attention to as Netflix’s ad business grows,” he said.
Netflix’s targets this year include “pushing” viewers who use subscriber-shared passwords to pay their own way.
“We have great confidence in our ability to accelerate revenue throughout the year as we scale ads and launch paid (account) sharing,” said Spencer Neumann, Netflix’s chief financial officer.
Netflix faces stiff competition from deep-pocketed rivals including Disney+, which has also introduced an ad-based subscription.
But despite the challenges, Netflix is one of the few tech giants to earn Wall Street’s trust with its share price up nearly 50% in the past six months.
Other tech giants and Disney were hammered in markets as companies laid off employees and cut costs after a massive hiring and spending spree at the height of the coronavirus pandemic.