Netflix added 7.7 million new subscribers in the fourth quarter of last year, the first quarter that the streaming giant introduced an ad-tier subscription.
The figure was significantly higher than the 4.5million that Netflix had previously forecast. The company credited the increase to “both strong acquisition and retention, driven primarily by the success of our Q4 content slate”.
Top-performers for its Q4 content included Wednesday, Harry & Meghan, Troll and Glass Onion: A Knives Out Mystery.
Despite the increase in subscribers, revenue came in below expectations. Revenue was in line with the company’s forecast at $7.85 billion, up 1.8 per cent from a year ago, while profits of 12 cents a share came in below expectations.
In the Q4 update, Netflix said it is in advertising for the long term.
“We believe branded television advertising is a substantial long term incremental revenue and profit opportunity for Netflix”.
It added that the “reaction to this launch from both consumers and advertisers” has confirmed its belief that our ad-supported plan has strong “unit economics” and will “generate incremental revenue and profit”.
It did add, however, that the impact of ads on revenue in 2023 will be “modest” given that it will build slowly over time.
