Netflix is strengthening its hold on the streaming category, gaining subscribers despite an industry-wide trend of many consumers canceling their media memberships.
The company reported in a letter to shareholders Tuesday (Jan. 23) accompanying its fourth-quarter 2023 earnings results that its global paid membership base grew by 12.8% year over year in the quarter, amounting to 13.1 million new subscribers.
In a livestreamed interview following the report, Netflix co-CEO Ted Sarandos noted that maintaining this growth will continue to demand costly investments in content — the kind of bets that, he argued, have paid off in the past.
“When the big packages come in, everyone’s duking it out for them,” he said. “It’s going to remain to be pretty competitive. I think that we’re reinvesting at a very healthy rate. We see that in the engagement. We see that in retention. We see that in the subscriber growth. So, I don’t think this would be the time to try to test that.”
The company’s subscriber growth comes despite consumers’ ongoing belt-tightening actions, cutting back on unnecessary services such as entertainment. Reports show that roughly 1 in 4 U.S. subscribers to major services like Netflix, Hulu and Disney+ have canceled at least three subscriptions in the last two years, and streaming service cancellations have been on the rise.
Moreover, streaming services tend to rank at the bottom of consumers’ list of priorities when they are considering which recurring bills to keep paying and which to cut out. PYMNTS Intelligence’s study “The One-Stop Bill Pay Playbook: Drivers of Consumers’ Bill Payment Priorities,” which drew from a survey of more than 2,100 U.S. consumers, found that when people are unable to pay all their bills, streaming subscriptions are the first to be canceled. Fifty-five percent of respondents reported that they would cancel streaming subscriptions if they needed to reduce the bills they received each month.
One of the content investments that Netflix has made to drive subscriptions is its deal, announced Tuesday, to exclusively stream WWE Raw in the United States, Canada, the United Kingdom and Latin America. Sarandos noted in the interview that the move is “right in the sweet spot” for Netflix when it comes to sports, being part sports and part entertainment.
Sporting events can drive adoption for streaming platforms. For instance, NBCUniversal streaming service Peacock announced Jan. 14 that the AFC wild-card playoff game between the Kansas City Chiefs and the Miami Dolphins, to which it had exclusive rights, averaged 23 million viewers, reaching 27.6 million viewers overall and becoming the most-streamed event in U.S. history.
Additionally, Netflix is seeing its expansion into gaming pay off, driving engagement.
“We’re stoked by the performance of [Grand Theft Auto],” Netflix co-CEO Greg Peters noted during the interview. “We had high hopes, but it exceeded even those high hopes. … [It’s] the biggest download and engagement numbers that we’ve seen so far. We were in the top mobile game downloads for several weeks, which was not only big for us, but big numbers for mobile gaming in general.”