Netflix has delivered details of its financial performance in Q4 2023. The Netflix results come as its streaming competitors continue to struggle to find new customers and profits.
Revenue in Q4 grew 12% year over year. In the note to shareholders that accompanied the results the company said: “Our healthy top-line growth reflects the benefits of paid sharing, our recent price changes, and the strength of our underlying business driven by a strong slate.”
Paid subscriber growth totaled 13.1m in Q4 2023 vs. 7.7m in Q4 2022 making the most recent quarter Netflix’s largest Q4 ever. Its global subscriber number is now just over 260m. That’s just short of 30m extra over the full year.
Selling Sunset is one of the series fuelling Netflix growth
Subscriber growth is not broken out for individual countries. However, growth is the Asia Pacific region saw membership increase from 38m to over 45m year-on-year.
In Q4 2023, global operating income amounted to $1.5b (all amounts US dollars), up from $0.5b in the year-ago period, while operating margin improved to 17% vs. 7% in the year-ago quarter.
The company reported it under-forecast operating income and operating margin which improved with new subscribers and lower spending. Operating income of $7b was up 23% year-on-year.
Commenting on the outlook, the company commented: “We expect healthy double-digit revenue growth for the full year 2024. We’ll also continue to invest in and build our ads business. We expect strong growth in 2024 but off a small base so it’s not yet a primary driver of our overall revenue growth. Our aim is to make ads a more substantial revenue stream that contributes to sustained, healthy revenue growth in 2025 and beyond.”
Ads plan working
The Netflix ads plan now accounts for 40% of all sign-ups in ads markets and the company is looking to retire its Basic plan in some of the ads countries, starting with Canada and the UK in Q2 and taking it from there. On the advertiser side, Netflix noted it is continuing to improve the targeting and measurement it offers customers.
Netflix content spend
The global streamer has indicated it is not about to stop its large content spends. “Since our global launch in 2016, we’ve been able to invest heavily in our slate — with content amortization up almost 3x from $4.8b in 2016 to $14.2b in 2023.
“Continuing to improve our entertainment offering is so important, and as many of our competitors cut back on their content spend, we continue to invest in our slate. In FY24, we expect a high single-digit percentage year over year increase in content amortization.”
Netflix and market consolidation
On the outlook for competitors, Netflix commented: “It’s logical to expect further consolidation, particularly among companies with large and declining linear networks. We’re not interested in acquiring linear assets. Nor do we believe that further M&A among traditional entertainment companies will materially change the competitive environment given all the consolidation that has already happened over the last decade (Viacom/CBS, AT&T/Time Warner, Disney/Fox, Time Warner/Discovery, etc.).
“But we expect our industry to remain highly competitive given: the franchise strength and programming expertise within traditional entertainment companies; ongoing heavy investment from large tech players like YouTube, Amazon and Apple; and broader competition for people’s time, including gaming and social media (TikTok, Instagram etc.).”
Part of the Netflix blockbuster 2024 slate
Bullish about growth prospects
Netflix is keen to forge growth internationally. “If we continue to execute well and drive continuous improvement — with a better slate, easier discovery and more fandom — while establishing ourselves in new areas like advertising and games, we believe we have a lot more room to grow. It’s a $600b+ opportunity revenue market across pay TV, film, games and branded advertising — and today Netflix accounts for only roughly 5% of that addressable market.
“Our share of TV viewing is still less than 10% in every country. But it all starts with the consumer. Because when we delight our members, we can drive more engagement, revenue and profit than the competition — creating an increasingly valuable entertainment company (for our members, content creators and shareholders) that will strengthen and grow over time.”
Program performance in calendar Q4 2023
Highlights of hit shows across the most recent quarter include:
Berlin, the La Casa de Papel prequel (46.6m views); Squid Game: The Challenge, the reality TV version of Netflix’s most-watched TV show ever (34.5m views), Virgin River S5 (34.3m views) and Selling Sunset S7 (11.9m views), as well as blockbuster finales for Sex Education and The Crown, which generated 45.7m and 30.0m views respectively.
Cast of the final season of The Crown
Future programming plans
Looking ahead, despite last year’s strikes pushing back the launch of some titles, Netflix said it has a big, bold slate for 2024:
“Audiences will be able to choose from hit returning dramas like The Diplomat S2, Bridgerton S3, Squid Game S2 and Empress S2; unscripted series like Tour de France: Unchained S2, Love is Blind S6, F1: Drive to Survive S6 and Full Swing S2; and brand new shows like 3 Body Problem (based on the best selling novel and from the Game of Thrones showrunners), Griselda (starring Sofia Vegara, which premieres this week), The Gentlemen (from Guy Ritchie), Eric (starring Benedict Cumberbach), Avatar: The Last Airbender, Cien Años de Soledad, from Colombia based on the novel by Gabriel García Márquez and Senna from Brazil.
New movies
On the film side, in addition to the Rebel Moon sequel, the slate includes Back in Action with Cameron Diaz and Jamie Foxx, Carry On from Steven Spielberg’s Amblin Entertainment starring Jason Bateman and Taron Edgerton, Spellbound from producer John Lasseter, Eddie Murphy reprising his role in Beverly Hills Cop: Axel F, and Six Triple Eight starring Kerry Washington and directed by Tyler Perry.
Live programming
The company is continuing to invest in and experiment with live programming — for example, the upcoming SAG Awards and Netflix Slam, an exhibition tennis match between Rafael Nadal and Carlos Alcaraz. The company today announced that starting in January 2025, WWE’s Raw will be live on Netflix exclusively in the US, Canada, UK and Latin America, with other countries and regions to be added over time. That means there might be less WWE on Foxtel into the future.
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