(News Bulletin 247) – The streaming specialist recruited 13.1 million subscribers over the period and exceeded consensus expectations. The group shows that it has probably won the streaming war.

In the ultra-competitive streaming sector, where its competitors are struggling to achieve profitability – Disney+ is the perfect example – Netflix is ​​clearly doing well.

The company released its fourth-quarter results Tuesday evening after the market closed, with dizzying subscriber gains. Netflix thus recruited 13.1 million over the period from October to December, shattering the consensus which stood at 8.97 million subscribers, according to Reuters.

These subscriber gains mark a record for Netflix in a fourth quarter. Bloomberg also highlights that this figure is the highest since the start of the pandemic (16 million new subscribers in the first quarter of 2020), when users were locked at home and subscribed to the service to have fun and forget the health context. .

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“David Beckham” and “The Crown”

The number of subscribers increased in total from 247 million at the end of September to 260.28 million at the end of December. The average revenue per subscriber also increased by 1% over one year.

As in the previous quarter, Netflix seems to be reaping the fruits of its past efforts, via price increases in 2023 but also its initiatives to put an end to the sharing of non-monetized accounts as well as the introduction of a subscription with advertising and at a price reduced.

Netflix also highlights the success of certain programs at the end of the year, citing the saga about the British royal family “The Crown” (30 million views), the series “Berlin”, derived from “Casa del Papel” (46.6 million views), “Squid Game: The Challenge”, a reality show based on the Korean series “Squid Game”, the success of the documentary on the couple David-Victoria Beckham (44 million views), films, “The Killer”, by David Fincher (70.5 million views, by David Fincher) and “Rebel Moon: a Child of Fire”, by Zack Snyder (74.6 million views) or, to give a French example, the vigor of the “Lupin” series (50 million views).

The company’s revenues significantly exceeded expectations, marking growth of 12.5% ​​year-on-year on a reported basis and 13% excluding currency effects to $8.833 billion, compared to a consensus of $8.72 billion.

Operating income stood at $1.496 billion for a corresponding margin of 16.9%, compared to a rate of 7% over the same period of 2022. Netflix exceeded its own forecasts, since the group expected an amount of 1.2 billion dollars and a rate of 13%.

Earnings per share, at $2.11, were, however, lower than analysts’ expectations ($2.22 for the consensus) and those of the company ($2.15) due to the unfavorable impact of exchange rates on the group’s debt denominated in euros.

Investing against the competition

Regarding its outlook, Netflix indicated that it expects growth of 13.2% in the first quarter of 2024 (and 16% excluding currency effects), with revenues projected at $9.24 billion, an operating margin of 26.2 % as well as earnings per share of $4.49.

The group also expects subscriber gains to slow compared to the last quarter of 2023, although proving to be higher than the figure for the first quarter of 2023 (1.8 million subscribers) while the average revenue per subscriber should progress over one year.

“We are entering 2024 with good momentum. We expect healthy double-digit revenue growth for the full year 2024 excluding currency effects, thanks to continued growth in membership and “average revenue per subscriber will improve as we adjust prices,” Netflix said.

Netflix has also announced its intention to continue to invest in its content to face increased competition, its rivals not only being Amazon Prime, Disney+, AppleTV but also YouTube, Instagram and Tik Tok.

“That’s why it’s so important to continue to improve our entertainment offering and while many of our competitors reduce their content spend, we continue to invest in our program schedule. For fiscal 2024, we expect a single-digit increase in content depreciation year-over-year,” the company announced.

The company, however, refuses external growth, with Netflix having explicitly stated that it does not wish to acquire “linear assets” (i.e. companies producing live television content). Furthermore, the group does not believe that media consolidation operations will change its environment to the extent that numerous mergers have already taken place (notably the acquisition of Fox by Disney).

Winner of the “streaming war”

This is because Netflix’s growth potential is still significant: the company estimates the market linked to pay television, films, games and associated advertising revenues at $600 billion, a market in which the company only weighs ‘up to approximately 5%. “In addition, our television audience share is still less than 10% in all countries,” adds Netflix.

On Wall Street, Netflix’s figures and prospects delight investors: the streaming group’s action gained 8.7% in post-market trading on Tuesday evening.

The group agrees with Bank of America, which last week warned that the company had now left the competition behind. “It is becoming increasingly clear that Netflix has won the ‘streaming war’,” wrote the American bank.

“Over the past 18 months, changing market dynamics, investor focus on profitability, and various talent strikes have led several media companies to re-evaluate their streaming aspirations,” explains -she.

“These changes (e.g. reduced spending and content production, increased third-party licensing) were a tacit acknowledgment that not all media companies will be able to achieve the reach and scale Netflix’s global streaming capabilities,” concluded Bank of America. The bank had raised its price target to 585 dollars (compared to 492 dollars Tuesday evening) and reiterated its advice to buy, noting “the coronation of the king in streaming”.