Netflix now has 230.75 million paying subscribers, significantly beating its forecast and market expectations for the most recent quarter and turning the page in a very difficult 2022 for the streaming service, according to a statement from earnings release Thursday.
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The platform also announced that its founder Reed Hastings is stepping down from his position as co-CEO alongside Ted Sarandos to Greg Peters.
“I’m so proud of our first 25 years and so excited for the next 25,” said Reed Hastings, who originally started a DVD rental business by mail. He will remain with the company as Executive Chairman.
Netflix went through a rough patch last year. The service had lost nearly 1.2 million subscribers in the first half of the year.
In the third quarter, it had attracted millions again, adding 7.66 million new subscribers between October and December, much more than expected.
The platform benefits in particular from new seasons of successful series such as “The Crown” about the British royal family and “Emily in Paris”, but also from new programs, including the documentary series “Harry & Meghan” and the phenomenon series “Wednesday”.
But Netflix remains “under a lot of pressure to correct course and deliver better results for its shareholders,” notes Insider Intelligence analyst Paul Verna after “its stock lost more than 50% of its value in 2022.”
In the fourth quarter, the California-based company posted $7.85 billion in sales but generated just $55 million in net income, well below the $257 million expected by the market.
Netflix has taken steps over the past year to generate new revenue streams that should pay dividends this year.
Notably, in November the platform introduced a new cheaper subscription with ads — a less prestigious solution that it had long rejected.
“This is the beginning of a turning point for the company,” said Mr. Verna. “We expect a relatively weak start with advertising revenues of $830 million in 2023.”
“Because Netflix, like other streaming companies, faces stiff competition, economic headwinds and an urgent need to focus on profitability rather than subscription growth,” he explained.