reed hastings

The Netflix co-founder announces his retirement.

(Photo: AP)

NY Netflix reports a surprisingly strong increase in customers. The number of users rose 7.6 percent to 231 million in the fourth quarter, the US streaming service announced Thursday. Analysts had expected only about half of the new users. the NetflixThe stock was up 7 percent in after-hours trading.

The main reason for the increase was the success of the documentary “Harry & Meghan” about the British Prince Harry and his American wife Meghan Markle and the popularity of the series “Wednesday”.

According to other information, sales were in line with expectations at $7.85 billion and an increase of 1.9 percent compared to the same period last year. However, the net profit collapsed to $55 million. In the last quarter of 2021, this was still $607 million.

According to Insider Intelligence analyst Paul Verna, the drop in profits despite user growth is also due to the introduction of low-cost subscriptions. Although these are financed by advertising, the corresponding revenue is significantly less than with conventional subscriptions. This could become a challenge for Netflix in the future.

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At the same time the figures were released, Netflix co-founder Reed Hastings announced his resignation. He is turning management over to his co-boss Ted Sarandos and to Greg Peters, who has been responsible for day-to-day business, he explained. However, Reed will remain with the company: he himself will rise to the top of the board of directors.

“Peters’ promotion to co-CEO alongside Sarandos shows how much the ad business means to Netflix,” said analyst Verna. Peters was one of the architects of the advertising business, and he overcame much resistance. According to them, “the current change puts advertising next to content in the spotlight.”

Huge competition in the streaming market

“Netflix finished the year strong,” said Sophie Lund-Yates, an analyst at Hargreaves-Lansdown. “As Wall Street grapples with recession fears and Federal Reserve jitters, the tremendous success of Netflix has provided some much-needed optimism.”

After a recent “worrying” development, “the way has now been paved for longer-term growth.” This was made possible by a wide range of content. However, further job cuts cannot be ruled out: Netflix is ​​struggling with “enormous” competition in the market. “Actually, it’s a herculean task for the group not to be outpaced by more agile competitors.”

With consumers tightening their belts due to rising prices and a weakening economy, Netflix had to for long periods of the past year struggling with declining customers. For this reason and for the fierce competition with rivals such as Amazon Among other things, the company introduced a cheaper, ad-supported subscription to Prime or Disney+.

In autumn 2022 transmission pioneer was able to post growth againalthough to a much lesser extent than in previous years.

With material from Reuters.

More: Interview with Reed Hastings: “RTL will be very successful with its streaming service”

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