Netflix announced on Thursday that it had more over 230 million global subscribers at the end of last year, beating analysts' projections as blockbusters such as "Wednesday" and "Harry & Meghan" brought in new viewers.
The business said in a letter reporting record fourth-quarter earnings that "2022 was a tough year, with a rough start but a brighter finish."
Furthermore, Netflix announced that co-founder Reed Hastings would step down as CEO after 25 years of leading the company's evolution from a DVD rental service to an entertainment powerhouse.
Hastings delegated management of Netflix to two long-term associates, Chief Operating Officer Greg Peters and Ted Sarandos, who has been the company's face in Hollywood and has already been designated co-CEO.
"It feels like our IPO was yesterday; we were wrapped in red envelopes," Hastings said during an earnings call.
"Hopefully, some of you have held the shares over the entire 21-year period."
Netflix went public in early 2002, with a $15 per share initial stock price.
Following the release of the earnings statistics, shares of the streaming television service gained nearly 7% in after-market trades to $337.31.
Hastings said in a blog post that the Netflix board has been considering succession planning for many years, joking that "even founders need to change!"
He stated that he would serve as executive chairman, saying that this was a role that many tech titan founders adopted, citing Amazon's Jeff Bezos and Microsoft's Bill Gates as examples.
The change of guard was revealed as Netflix reported increased subscribers that exceeded even the most optimistic predictions.
The streaming service says it gained 7.7 million new subscribers in three months, boosting its global membership to 230 million individuals.
Netflix praised a successful slate of new content, including the horror-themed comedy "Wednesday," calling it the company's third most popular series ever.
According to Netflix, "Harry & Meghan: A Royal Tell-All" and "Glass Onion: A Knives Out Mystery," starring Daniel Craig, also scored.
"This stands in stark contrast to the first half of the year. "Creating the next huge blockbuster drives subscribers," said Paolo Pescatore, a tech and media analyst.
As customers cut back on entertainment spending due to high inflation and an uncertain economy, the new titles helped attract users to a new lower-priced "Basic with Ads" subscription.
Revenue from October to December was $7.85 billion, which was in line with expectations.
Netflix believes that adding new subscribers is no longer the most significant indicator for evaluating the company's health, and that revenue should be the primary criterion.
"What may be missed in the shuffle is that some number of new members - we don't know how many - presumably came in on Netflix's ad-supported tier," Insider Intelligence lead analyst Paul Verna said.
"That means lower average revenue per subscriber, which is a measure Wall Street will pay more attention to as Netflix's ad business expands up," he says.
This year, Netflix plans to "nudge" viewers who use passwords shared by subscribers to pay their own way.
"We have strong confidence in our ability to increase revenue throughout the year as we scale commercials and offer paid sharing (of accounts)," Netflix CFO Spencer Neumann said.
Netflix faces stiff competition from well-funded rivals such as Disney+, which has also launched an ad-supported subscription service.
Despite the obstacles, Netflix is one of the few tech behemoths that has earned Wall Street's trust, with its stock up about 50% in the last six months.
Other IT behemoths and Disney have taken a beating in the markets as they lay off workers and trim costs following a big hiring and spending spree during the height of the coronavirus pandemic.
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