With the upfronts 2022-23 approaching Netflix
The three announcements come at a time when the entire streaming industry is facing challenges such as: B. increased competition, slower subscriber growth, rising production costs, layoffs, Wall Street’s financial woes and a likely sluggish advertising industry.
Despite those concerns, Netflix grew its subscribers by 7.66 million in the fourth quarter, beating Wall Street’s expectation of 4.57 million net new subscribers (Netflix expected 4.5 million). It was also triple the increase of 2.4 million in the third quarter. Netflix had lost subscribers in the first and second quarters of 2022. Globally, Netflix ended 2022 with 230.75 million subscribers, up 4% year over year. Subscriber growth was predominant worldwide, including the United States and Canada, which increased by 910,000 subscribers.
While the strong report helped allay investor concerns about Netflix, earnings reports from other well-known streaming providers are slated for later in the quarter.
Aside from its earnings report, January was a busy month for the streaming giant. Earlier this month, Netflix announced that they would be holding their first promotional presentation. Netflix had scheduled the spot for late Wednesday afternoon (5 p.m. ET), which has been held by CBS (now Paramount) for decades
CBS decided that instead of a big presentation in April, they would hold a series of more intimate meetings with advertisers. In the past, the CBS Upfront has been one of the highlights of the week, with musical guests including Aretha Franklin, Mariah Carey and The Who. Since the Upfront was at times always scheduled for Wednesday afternoons (Matinee Day), Broadway artists like the cast performed nearby Jersey Boys hairspray and Avenue Q would come to entertain advertisers on their break.
NBC will kick off the week in advance with a major promotional presentation at Radio City Music Hall Monday morning. Other media companies have yet to announce their plans in advance.
Netflix isn’t the first digital company to invade the previous week of television. Last year, Alphabet’s YouTube hosted a “brandcast” presentation during TV Upfronts. This year, YouTube returns right after Netflix with a presentation Wednesday at 7 p.m. ET. For its presentation, YouTube has moved the venue to Lincoln Center’s larger David Geffen Hall (last year’s Imperial Theater), a venue where Disney had previously held its Upfronts.
According to Nielsen’s Gauge Report, as of December 2022, YouTube accounted for 8.7% of all TV/video viewers and Netflix’s share was the largest among all streaming providers at 7.5%. Most digital media companies have their own NewFronts, run by the Internet Advertising Bureau (IAB), scheduled a few weeks ahead of television.
Also this month, Nielsen announced an expansion of its audience measurement agreement with Netflix. The new multi-year agreement includes the US, Mexico and Poland. According to Nielsen, Netflix will have access to its cross-platform audience data. The announcement came a week after the release of Nielsen ONE, its new cross-platform measurement tool available in the US. Nielsen had already reached an agreement with Netflix last year. In addition, Nielsen provided viewing data for Amazon
Ahead of the earnings announcement, it was reported that the new ad-supported tier was off to a slow start. digitag reported that Netflix only shares 80% of its viewership guarantee with advertisers and offers cashback to its customers. The inability to meet audience projections could be caused by a lack of subscribers who signed up for the ad-supported tier or a lack of viewers for their programs. Netflix had charged advertisers $65 CPM, which was among the highest in the industry.
Netflix had priced the ad-supported tier at $6.99 per month for subscribers, and observers noted that they didn’t do a good job of promoting the tier to consumers. Antenna reports that only 9% of new Netflix subscribers opted into the ad-supported tier in November. In addition, 9% of them are the Wall Street Journal found that 43% of them were already Netflix subscribers and had opted for the cheaper ad service. Netflix projects that they will have 40 million ad-supported subscribers by the end of this year. In its earnings report, Netflix declined to discuss the financial implications of its new ad-supported tier
In the fourth quarter, Netflix benefited from such popular shows as Wednesday by Tim Burton (based on the Addams family character), a new episode of Rian Johnsons knife out Movie (“Glass Onion”) Troll, all quiet on the western front, my name is Vendetta and Harry & Megan, a documentary series. Netflix announced it will stream 49 new and original films in 2023, down from 2022. It has been reported that Netflix will spend $17 billion on content this year. Netflix has yet to address password sharing, which affects another revenue stream for 100 million households.