Netflix increases user numbers thanks to “Harry & Meghan” – co-founder Reed Hastings announces resignation

new York Netflix reports a surprisingly strong increase in subscribers. The number of users rose by 7.6 million to 231 million in the fourth quarter, the US streaming service announced on Thursday. Analysts had expected only about half of the new users. Netflix stock rose 7% in after-hours trading.

The main reason for the increase was the success of the documentary “Harry & Meghan” about the British Prince Harry and his US wife Meghan Markle and the popularity of the series “Wednesday”.

According to other information, sales were in line with expectations at $7.85 billion and an increase of 1.9 percent compared to the same period last year. However, net profit collapsed to $55 million. In the final quarter of 2021, this was still $ 607 million.

According to Paul Verna, an analyst at Insider Intelligence, the drop in profits despite user growth is also due to the introduction of reduced-cost subscriptions. Although these are advertising-financed, the corresponding income is significantly lower than with conventional subscriptions. This could become a challenge for Netflix in the future.

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At the same time as the figures were presented, Netflix co-founder Reed Hastings announced his resignation. He is handing over management to his co-boss Ted Sarandos and to Greg Peters, who has been responsible for day-to-day business, he explained. However, Reed will remain with the company: he himself will move to the top of the board of directors.

>> Read also: That’s what a Netflix subscription costs in 2023

“Peters’ promotion to co-CEO alongside Sarandos shows how much the advertising business means to Netflix,” said analyst Verna. Peters was one of the architects of the advertising business and got through against a lot of resistance. Accordingly, “the current shift puts the focus on advertising alongside content”.

Enormous competition in the streaming market

“Netflix ended the year with a bang,” said Hargreaves-Lansdown analyst Sophie Lund-Yates. “As Wall Street grapples with recession fears and Federal Reserve jitters, Netflix’s tremendous success has provided some much-needed optimism.”

After a recent “worrying” development, “the way has now been paved for longer-term growth”. This was made possible by a strong range of content. However, further job cuts cannot be ruled out: Netflix is ​​struggling with “enormous” competition on the market. “In reality, it is a mammoth task for the group not to be overrun by more nimble competitors.”

With consumers tightening their belts due to rising prices and a sluggish economy, Netflix struggled with customer dwindling for much of the past year. For this reason and because of the stiff competition with rivals like Amazon Prime or Disney+, the company introduced a cheaper, ad-supported subscription, among other things.

In autumn 2022, the streaming pioneer was able to record growth again, albeit to a much lesser extent than in previous years.
With agency material

More: Interview with Reed Hastings: “RTL will be very successful with its streaming service”

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