Netflix added nearly 19 million subscribers during the holiday-season quarter to help propel its earnings beyond analysts’ projections, capping the video streaming service's best year yet in a sign that its expansion into live programming is paying off. The numbers released Tuesday covered a October-December period highlighted by Netflix’s streaming of a widely watched fight between YouTube sensation Jake Paul and former heavyweight boxing champion Mike Tyson in addition to two National Football League games on Christmas Day. Those marquee events helped Netflix to easily surpass the 13 million subscribers that picked up in the same quarter during 2023. Although Netflix’s interest in live programming is primarily tied to its efforts to sell more commercials, it also appears to be giving current subscribers another reason to stick with the service while also reeling in more viewers to pay for the service. Netflix ended last year with more than 300 million worldwide subscribers, an increase of 41 million from 2023. That eclipsed its previous best year of growth during 2020 when its service added more 36.6 million subscribers amid pandemic lockdowns that kept people corralled at home and desperate for entertainment. Forrester Research analyst Mike Proulx thinks live programming is quickly becoming Netflix's “secret ingredient” that is helping to widen its lead over its streaming rivals. “With more choice in programming than ever before, streaming services need to differentiate,” Proulx said. “FOMO (fear of missing out) is a powerful tool in piquing interest and creating stickiness.” The October-December breakdown marked the last time Netflix plans to provide a quarterly count on its total subscribers as management tries to get investors to intensify their focus on the Los Gatos, California company’s financial performance. And those figures were robust in the most recent quarter, with Netflix earning $1.9 billion, or $4.27 per share, nearly doubling from the same time in 2023. Revenue climbed 16% from the same 2023 period to $10.2 billion. Read: Top 10 Netflix English Originals to Watch in February 2025: Movies, Series, and Shows To juice its finances even more this year, Netflix announced in its shareholder letter that it will be raising its prices in the U.S., Canada, Portugal and Argentina in the upcoming weeks. Netflix didn't spell out its new prices in those markets, but the company increases the costs of its plans in increments of a $1 to $2 per month. Signaling that Netflix is confident the price increases won't trigger a backlash resulting in mass cancellations, Netflix slightly raised its revenue outlook for this year to a mid-range of $44 billion, which would translate into a roughly 13% increase from last year. “When you’re going to ask for a price increase, you better make sure you have the goods and the engagement to back it up,” Netflix co-CEO Ted Sarandos said during a conference call with analysts. Netflix’s shares surged by 14% in extended trading after the report came out. If the shares behave similarly in Wednesday's regular trading session, it will mark a new high for the stock. The shares soared by 83% last year to create nearly $200 billion in additional shareholder wealth as Netflix continued to extend its lead over the rest of the video streaming pack. Besides asking subscribers to pay more, Netflix is trying to sell more advertising as part of an initiative that began in late 2022 with the introduction of a low-priced version of its service that included periodic commercial interruptions for the first time. The commercials are shown to all subscribers during live programming, one of the reasons Netflix is focusing more on the segment, leading to high-priced deals with the NFL, World Wrestling Entertainment and the Women’s World Cup. Netflix co-CEO Greg Peters told investors during the conference call that the ad-supported service accounted for more than half of Netflix's new subscribers during the last quarter, Netflix's advertising evolution has "transitioned from crawl to walk” Peters said. Read more: January 2025 Netflix English Originals Lineup Netflix still isn’t revealing how much advertising revenue that it’s bringing in, with management saying the amount will remain relatively small for at least another year or two. But Netflix’s main drawing card remains scripted TV series and movies – an entertainment pipeline that this year will include new seasons of popular shows such as “Stranger Things,” “Squid Games,” and “You.” Netflix plans to increase its programming budget to $18 billion this year, an increase of about $1 billion, to keep its video pantry well stocked.

An unexpectedly sharp drop in subscribers has Netflix considering changes to its service that it has long resisted: Minimizing password sharing and creating a low-cost subscription supported by advertising. The looming changes announced late Tuesday are designed to help Netflix regain momentum it’s lost over the past year. Pandemic-driven lockdowns that drove binge-watching have lifted while deep-pocketed rivals such as Apple and Walt Disney began to chip away at its vast audience with their own streaming services. Netflix’s customer base fell by 200,000 subscribers during the January-March quarter, the first contraction it’s seen since the streaming service became available throughout most of the world outside of China six years ago. The drop stemmed in part from Netflix’s decision to withdraw from Russia to protest the war against Ukraine, resulting in a loss of 700,000 subscribers. Netflix projected a loss of another 2 million subscribers in the current April-June quarter. Also Read: Netflix shares drop 25 after service loses 200k subscribers The erosion, coming off a year of progressively slower growth, has rattled another key constituency for Netflix — its shareholders. After revealing its disappointing performance, Netflix shares plunged by more than 25% in extended trading. If the stock drop extends into Wednesday’s regular trading session, Netflix shares will have lost more than half of their value so far this year — wiping out about $150 billion in shareholder wealth in less than four months. Aptus Capital Advisors analyst David Wagner said it’s now clear that Netflix is grappling with an imposing challenge. “They are in no-(wo) man’s land,” Wagner wrote in a research note Tuesday. The Los Gatos, California, company estimated that about 100 million households worldwide are watching its service for free by using the account of a friend or another family member, including 30 million in the U.S. and Canada. “”Those are over 100 million households already are choosing to view Netflix,” Hastings said. “We’ve just got to get paid at some degree for them.” To prod more people to pay for their own accounts, Netflix indicated it will expand a trial program it has been running in three Latin American countries — Chile, Costa Rica and Peru. In this locations, subscribers can extend service to another household for a discounted price. In Costa Rica, for instance, Netflix plan prices range from $9 to $15 a month, but subscribers can openly share their service with another household for $3. Netflix offered no additional information about how a cheaper ad-supported service tier would work or how much it would cost. Another rival, Hulu, has long offered an ad-supported tier. While Netflix clearly believes these changes will help it build upon its current 221.6 million worldwide subscribers, the moves also risk alienating customers to the point they cancel the service. Also Read: Squid game season-2 on Netflix cast plot probable release date Netflix was previously stung by a customer backlash in 2011 when it unveiled plans to begin charging for its then-nascent streaming service, which has previously been bundled for free with its traditional DVD-by-mail service before its international expansion. In the months after that change, Netflix lost 800,000 subscribers, prompting a apology from Hastings for botching the execution of the spin-off. Tuesday’s announcement was a sobering comedown for a company that was buoyed two years ago when millions of consumers corralled at home were desperately seeking diversions — a void Netflix was happy to fill. Netflix added 36 million subscribers during 2020, by far the largest annual growth since its video streaming service’s debut in 2007. But Netflix CEO Reed Hastings now believes those outsized gains may have blinded management. “COVID created a lot of noise on how to read the situation,” he said in a video conference Tuesday. Netflix began heading in a new direction last year when its service added video games at no additional charge in an attempt to give people another reason to subscribe. Escalating inflation over the past year has also squeezed household budgets, leading more consumers to rein in their spending on discretionary items. Despite that pressure, Netflix recently raised its prices in the U.S., where it has its greatest household penetration — and where it’s had the most trouble finding more subscribers. In the most recent quarter, Netflix lost 640,000 subscribers in the U.S. and Canada, prompting management to point out that most of its future growth will come in international markets. Netflix ended March with 74.6 million subscribers in the U.S. and Canada.    

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