Netflix added more than 7 million subscribers in the fourth quarter, significantly more than expected.
The strong growth came as Reed Hastings announced his resignation as co-CEO.
Greg Peters, the company’s former COO, who leads the advertising business, will take over the role.
Netflix added 7.66 million subscribers in the fourth quarter of last year, significantly exceeding the 4.5 million subscribers the company had estimated three months ago.
The stronger-than-expected subscriber growth came as the company announced a change to its top line: Netflix co-founder Reed Hastings stepped down as co-CEO. Greg Peters, the company’s former COO, stepped into the role of co-CEO, joining Ted Sarandos, who has been co-CEO since 2020. Hastings will remain executive chairman.
Netflix said in its third-quarter report that it is “increasingly focused on revenue as our primary revenue metric,” but fourth-quarter revenue was $7.85 billion, in line with expectations, but the lowest since the company went public, according to Reuters.
Shares of Netflix rose more than 6% in recent after-hours trading.
Following this report, Netflix will no longer provide subscriber estimates, but will continue to provide revenue guidance.
In his role as COO, Peters led the company’s expansion into advertising as the company sought new revenue sources. In November, Netflix launched its cheaper ad-supported plan, which it previously refused to do. Netflix Basic with Ads is $6.99 per month in the US.
In its Q3 report, the company said it does not expect a “material contribution” from the new advertising plan in Q4 and expects to increase membership in the plan “gradually over time”.
Despite this, reports suggest that Netflix Basic with Ads is off to a slow start. The Wall Street Journal reported last month that this was Netflix’s least popular plan in November, based on data from analytics firm Antenna.
In terms of content, Netflix had a strong quarter to end the year, releasing one of its biggest TV shows on “Wednesday” and one of its most popular films with “Glass Onion: A Knives Out Mystery.”
But 2022 brought with it unique challenges. It lost subscribers in the first two quarters of the year, marking the company’s first loss for two consecutive quarters. It cut at least 500 roles in extensive layoffs.
The company rallied in the third quarter by adding subscribers, and executives took a victory lap during October’s earnings call, defending the company’s strategies.
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