Netflix experienced a surge in new sign-ups at the end of last year, with more than 13.1 million subscriptions added in the last quarter of 2023. The increase, the highest since 2020, is attributed to the company’s crackdown on password-sharing, compelling users to create individual accounts. Despite previous resistance to ads, Netflix revealed that its cheapest plan, which includes advertising, accounted for 40% of new sign-ups in the 12 countries where this option is available, including significant markets like the UK and US.
The unexpected gains come as an ironic twist for Netflix, which had long resisted incorporating advertisements, citing potential negative impacts on the viewer experience and business complications related to privacy concerns. The recent approach change was triggered by an unexpected subscriber decline and profit reduction in the first half of 2022.
In response, Netflix introduced new strategies, including the password crackdown, exploring live events, and incorporating advertising. The platform recently announced a $5 billion deal to bring WWE Raw to its content lineup.
Netflix expressed confidence in its growth trajectory, stating that it would resume its standard approach to pricing after implementing the paid sharing initiative. The company co-chief executive, Greg Peters, referred to this as a return to “business as usual.” Despite the gains in advertising-supported plans, Netflix emphasised that it did not expect advertising to significantly contribute to growth in the coming year.
Competitors in the streaming industry, like Amazon, are also adopting strategies to diversify revenue streams. Amazon plans to show ads to Prime members unless they pay an additional fee, while Netflix continues to experiment with various approaches to attract new viewers and generate additional revenue.
Financially, Netflix reported more than $33.7 billion in revenue for 2023, reflecting a 6% increase over 2022, with profits reaching $5.4 billion for the year, up from $4.49 billion the previous year. The strong results and unexpected subscriber growth affirmed Netflix’s dominant position among streaming platforms, according to industry analysts.