Netflix reports money is flowing in – as are ads for Canadian subscribers

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Netflix told investors it has added millions of new customers and has plenty of room to grow revenue – with some of that growth coming from the planned elimination of the cheapest, no-cost plan. advertising available to Canadians.

According to fourth-quarter results, released late Tuesday afternoon, Netflix plans to “retire” what it calls its Basic package in Canada and the United Kingdom starting in April 2024.

The basic ad-free plan costs $9.99 per month, a price that existing customers on this plan can continue to pay as long as they don’t change their account.

New subscribers, as well as existing Netflix subscribers who wanted to change their plan, have not been able to choose this plan since June 2023.

Netflix has not confirmed the exact date when existing customers will be cut off. He refers CBC News to a letter published for investors as part of the company’s quarterly results, which indicates that the action will begin during its second quarter.

In June 2023, when Netflix announced it was removing the cheapest ad-free plan for new customers, the company told The Canadian Press that existing customers would eventually be excluded from the base plan.

These subscribers will choose between a cheaper plan, at $5.99 per month, that includes ads, or one of its ad-free plans, which starts at $16.49 per month.

Incomes are increasing. Advertisements too

News of the plan’s abandonment comes as part of the company’s year-end announcement that its revenue in the final three months of 2023 was up 12% year-on-year. former.

Investors were also informed that ad-inclusive plans now account for 40% of all Netflix sign-ups in markets that offer ad-inclusive plans. The company also announced plans to improve how it targets ads to viewers.

These investor announcements come as competitor Amazon Prime Video prepares to deploy mandatory advertising on its streaming platform. Canadian viewers will have to pay $2.99 ​​more per month if they want to opt out of ads on this service.

Investors seem to like what they see

Netflix’s stock price rose Wednesday as subscriber growth appeared to bolster investor confidence that the company has won the streaming wars with its crackdown on password sharing and a solid list of content.

The company announced Tuesday that 13.1 million people signed up for its service in the fourth quarter, marking its best growth since the start of the pandemic and well above estimates of 8.97 million subscribers.

“Netflix has already won the streaming wars and this kind of strong result… especially compared to its streaming peers, this is what a victory looks like,” said Jeffrey Wlodarczak, an analyst at Pivotal Research Group, who raised his estimated target for Netflix’s stock price.

WATCH | Consumers are warned to get used to paying more for streaming:

Streamers are warned to get used to paying more

Streaming industry observers warn that the days of low streaming bills are over as more services, like Netflix and Disney+, take steps to increase their profitability.

The company’s shares represent a premium to its competitors, and some analysts believe the higher valuation could be justified as the continued search for profitability in other streaming companies will force them to license more to Netflix, which could help Netflix increase subscriber growth and averages. revenue per user.

The company highlighted strong demand for licensed titles such as Young Sheldon during its earnings call Tuesday. Its fourth quarter lineup also included the final season of The crown and the David Fincher film The killer

The company plans to spend up to US$17 billion on content this year, after Hollywood’s twin actors’ and writers’ strikes last year disrupted some productions.

Netflix is ​​also stepping up its bets on live programming and on Tuesday unveiled a more than $5 billion U.S. rights deal to bring World Wrestling Entertainment to Raw and a few other shows exclusively at its service in January 2025.

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