NETFLIX signed up 13.1 million customers in the final three months of 2023, the streaming giant’s best quarter of growth since viewers were stuck at home in the early days of the pandemic.

The strong tally exceeded Wall Street’s estimate of 8.9 million and beat projections in every region of the world, with Netflix adding more than five million customers in Europe, the Middle East and Africa alone. Sales rose to US$8.8 billion, the company said on Tuesday (Jan 23), also topping forecasts.

Netflix rebounded from a rocky 2022 by posting one of its strongest years of customer growth ever, buoyed by a crackdown on password sharing, the introduction of a cheaper advertising-supported option and a strong slate of programmes. Hit shows of the latest quarter included the post-apocalyptic thriller Leave the World Behind and a documentary about soccer great David Beckham.

Shares of Netflix rose as much as 7.7 per cent to US$530 in extended trading after the announcement. They are up 38 per cent in the past year through the close in New York.

The robust year-end to subscriber growth may not continue into 2024. Netflix said it will not add as many customers in the first quarter of 2024 as it did in the final months of 2023, though the tally will exceed the year-ago period’s 1.8 million. Wall Street expects Netflix to add 4.3 million customers in the quarter.

That will not hurt sales growth, however. Netflix said it will continue to boost revenue at a double-digit rate, in part by raising prices, as it has done for many years now.

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When Netflix lost customers in the first half of 2022, management responded by taking steps it had long resisted. The company introduced advertising and forced customers to stop sharing passwords. The ad-supported tier got off to a slow start but has begun to gather momentum. The company said earlier this month it now has more than 23 million people using the tier.

Netflix still makes almost all of its money from people who pay to watch films and TV shows on demand. But that will change in the years ahead. The company has invested millions in video games and this week took another step in a new direction by striking a deal to stream live wrestling every week starting next year.

Netflix’s strong performance stands in sharp contrast to many of its competitors in Hollywood, which operate shrinking cable networks and unprofitable streaming services.

Fourth-quarter earnings rose to US$2.11 a share, though that was short of Wall Street forecasts. Netflix generated a net income of US$5.4 billion for all of last year and closed 2023 with US$7.1 billion in cash and short-term investments. BLOOMBERG