Netflix shares soar 10% after record Q4 subscriber growth, as streamer eyes HBO ‘Sex And The City’ deal

Lupin (Source: Netflix)

Netflix shares soared more than 10% in after-hours trading after it revealed record subscriber growth in Q4, while a deal for HBO’s Sex And The City is also reportedly in the works.

The global streamer claimed 13.12 million net subscribers in the final three months of 2023, a new record four the quarter that was driven by shows such as The Crown, Squid Game: The Challenge, France’s Lupin S3 and South Korean drama Strong Girl Nam-soon.

It means Netflix now has just over 260 million subscribers globally, with EMEA leading the recent growth surge by adding 5 million net subscribers in Q4 to take it to almost 89 million subscribers across the region.

Squid Game: The Challenge (Source: Netflix)

Subscribers in Asia-Pacific rose by a net 2.9 million in Q4 to take its regional total to 45 million, while the US and Canada added 2.8 million net subscribers to take its North American total to 80 million.

Lat Am subscribers rose by 2.35 million, meaning Netflix has almost 46 million customers across the region.

Operating income rose from $550m last year to $1.5bn in Q4, fuelled by a revenue rise of 12.5% and content spending – which was affected through 2023 because of the US writers and actors strikes – described as “lower than planned”.

Netflix eyes more licensing amid Sex And The City deal

The results came ahead of a report in the New York Times that claimed the streamer is poised to pick up rights to HBO series Sex And The City, reflecting the rising appetite of US studios to sell their most acclaimed shows to Netflix.

The streamer acquired shows including Ballers and The Pacific from HBO owner Warner Bros. Discovery (WBD) last year, but a deal for Sex And The City would differ as it remains a live franchise with spin-off, And Just Like That, into a third season on WBD streamer Max.

WBD, like its US studio stablemates such as Disney, had until last year looked to err away from striking deals with Netflix, despite having previously sold flagship HBO titles such as The Sopranos to cablenets including A&E. It has also licensed Sex And The City to Prime Video.

Breaking Bad

Ted Sarandos, Netflix’s co-CEO, told analysts on an earlier investors call that he was “thrilled” that studios were open to licensing more shows to his company and added that the streamer had a “rich history of helping break some of TV’s biggest hits”, pointing to shows such as Breaking Bad and The Walking Dead.

“Because of our recommendation, our reach, we can resurrect shows like Suits and turn [them] into a big pop culture moment but also generate billions of hours of joy for our members,” he continued, adding that Netflix “can uniquely add more value to the studio’s IP than they can.

“Not all the time, but sometimes, it does, and we’re the best buyer for it,” he added.

Sarandos said that he did not see any “meaningful change” in Netflix’s “healthy mix” between originals and licensed titles, adding: “It might be that we can deliver more on our programming spend with some licensed titles, but we also believe that we deliver incredible amount of value, excitement, and differentiation with our original series.”

Netflix spending plans on content in 2024

The streamer’s CFO Spence Neuman confirmed that Netflix is “trying to get back up” to spending $17bn on content in 2024 following the US strikes when it dropped to $13bn.

He added that with growing revenue and profits, the streamer would look to “reinvest a good portion of that back into business, which means increasing our content spend. We do plan to do that, but we want to do it in a smart, judicious, responsible way.”

Emily In Paris

Sarandos added that the reported $5bn investment to secure rights to WWE over the next decade – a deal revealed yesterday – would “fit inside” that programming spend.

He added that “shoulder programming” would be sought, replicating the streamer’s approach to sports with series such as Formula 1-focused Drive To Survive and cycling show Tour de France. The WWE deal did not indicate a new strategy towards acquiring rights to live sports, however, he added.

The streamer added that engagement in gaming had increase three-fold over the past year and co-CEO Greg Peters said that if it “leads to business benefits like increased retention, then we’ll be able to scale that investment appropriately.”

However. he cautioned that “it’s worth noting that our games investment is very small fraction of our overall content budget right now.”

Neuman also said Netflix would not look to buy existing streaming operations, with Paramount reportedly exploring its options.

“Our historical bias is to build and not buy,” he said. “We’re not interested in some of the big linear assets that may or may not be available.”

Netflix’s upcoming slate, he added, would help to generate “double digit” revenue growth in 2024, with returning shows such as Bridgerton, Emily In Paris and Squid Game fuelling subscriber engagement.