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Netflix revenue and subscription gains outpace expectations in Q4 results

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By Kendra Barnett | Senior Reporter

January 23, 2024 | 6 min read

Strong fourth quarter results saw Netflix’s stock price spike more than 7% Tuesday afternoon.

Netlfix building

Netflix reported better-than-expected Q4 revenues just hours after unveiling a new streaming deal with WWE / Adobe Stock

Netflix filed its fourth quarter financial results Tuesday afternoon, reporting better-than-expected revenues and subscriber growth.

The streaming titan generated $8.83bn in revenue during the quarter, beating an $8.72bn projection from the London Stock Exchange Group (LSEG). The figure represents a 12.5% year-over-year revenue increase.

Net income came in under Wall Street projections, reaching $938m, or $2.11 per share. LSEG expected $2.22 per share.

The company has in recent months endeavored to diversify its revenue streams in an ever-more saturated market (where, in the US, 85% of households use at least one streaming service, per recent HarrisX data) – cracking down on password-sharing and debuting an ad-supported tier last year.

But Netflix’s Q4 results indicate that it has not yet tapped out the market on regular subscriptions. The company added 13.1 million subscribers during the quarter, compared to average expectations of around 8.8 million.

The growth brings the platform’s total paid subscriber count up to a staggering 260.8 million. Of its new subscribers, nearly 3 million come from the North American market, where Netflix’s market penetration is highest.

The results were posted mere hours after the company announced it has closed a 10-year, $5bn deal for the exclusive streaming rights to WWE Raw. It’s a development that experts say bodes well for Netflix’s advertising business – and hints at a broader sea change in the world of live sports and entertainment, away from broadcast TV and toward streaming.

“WWE Raw's massive media rights deal with Netflix is a win-win for both the brand and the streamer, says Kevin Krim, president and chief executive of EDO, a TV advertising measurement firm that works with Netflix and other players in both linear and streaming television. “Netflix gains access to a built-in and highly engaged audience that's been growing for over three decades, and WWE continues to diversify its media rights while gaining a stronger foothold in streaming.”

Data from EDO indicates that, in 2023, WWE Monday Night Raw programming garnered 23% more ad-driven consumer engagement than the average primetime program on linear TV.

“Combined with Netflix’s successful first foray into live sports with the Netflix Cup in November, it’s clear there’s recognition that live sports and other live events are some of the most effective ways to engage consumers with programming and ads,” Krim says. “With the addition of live WWE Monday Night Raw programming beginning in 2025, the streamer is signaling its intentions to compete.”

Other media experts have suggested that increased investment in live sports and entertainment content is likely to attract fans initially to Netflix’s ad-supported tier – and eventually translate into more subscriptions, too. In any case, it’s good news for Netflix, which will benefit from more valuable ad inventory on its free tier while driving revenue with new subscriptions.

As Insider Intelligence principal analyst Ross Benes puts it: “The WWE deal will enhance Netflix’s advertising efforts by generating a sizable amount of inventory weekly. It will also provide Netflix with another justification to raise future subscription prices.”

Netflix follows in the footsteps of other major streaming platforms that have found success with live sports and entertainment deals, including Prime Video with the NFL’s Thursday Night Football and Apple TV with MLS and MLB. The new Netflix-WWE deal is just the latest indication of what’s to come, experts say.

“As streaming services invest more in live programming, expect increased partnerships between major sports franchises and streaming platforms,” says Jennifer D’Alessandro, head of ad sales and marketing at video technology and distribution company Future Today. “This shift may prompt other sports organizations to explore similar agreements, transforming the global delivery of sports content.”

Netflix is poised to build on its Q4 success in the coming year. Its burgeoning advertising business is expected to play an outsized role in its bottom line performance. “As one of the only profitable streaming services, Netflix’s degree of success with its ads business in 2024 will be the key determinant in driving margins up to the company’s goal,” says Forrester vice-president and research director Mike Proulx. “This is dependent on continued scaling of its ad tier as well as innovative ad types and sponsorships that break through.”

And despite Netflix’s dominance in the streaming space, there’s no denying that competition for ad dollars is increasingly fierce as platforms go neck-and-neck for consumer attention with free, ad-supported content offerings. “Since just about every streaming service has jumped on the ad tier bandwagon,” Proulx explains, “advertisers have a lot more choices in the connected TV space.”

The company has expressed confidence in its direction. “If we continue to execute well and drive continuous improvement – with a better slate, easier discovery, and more fandom – while establishing ourselves in new areas like advertising and games, we believe we have a lot more room to grow,” Netflix leadership said in a letter to shareholders today.

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