Netflix Delivers Another Smackdown

Netflix clinched a deal with WWE that will bring popular wrestling shows to the streaming service in the U.S. and certain other markets.
Netflix clinched a deal with WWE that will bring popular wrestling shows to the streaming service in the U.S. and certain other markets.


The streaming leader cemented its position with a strong boost in subscribers while the advertising contribution remains small.

Leave it to the biggest player in Hollywood to open earnings season with a bit of high drama.

The streaming giant’s fourth-quarter results late Tuesday managed to blow away already sky-high expectations that had driven the stock price up 42% over the last three months. Netflix added 13.1 million net new paid subscribers—50% more than Wall Street had projected, and the most the company has ever added in a single quarter save for the first quarter of 2020, when the Covid-19 outbreak sent the masses running home to their TV sets.

The gains further cement Netflix’s place as the clear winner in the streaming wars, with more than 260 million paying to watch its programming globally. That includes a strong boost late in the year in both the U.S. and European markets that account for the bulk of the company’s revenue. Netflix shares jumped 8% in after-hours trading. If the gains hold on Wednesday, Netflix will carry a market value of about $233 billion, which is 13% above the combined value of Disney, Warner and Paramount.

The subscriber jump was a particularly remarkable accomplishment during a period when new content releases were somewhat stymied by labor strikes in Hollywood. Netflix actually added more subscribers on its own than Wall Street had predicted for Netflix, Disney, Warner Bros. Discovery and Paramount Global combined for the period. The company is also significantly ramping up its investment in live programming. It announced a 10-year deal Tuesday morning with WWE that will bring popular wrestling shows such as “Raw" to Netflix in the U.S. and certain other markets.

But Netflix could face a smackdown of its own. Amazon—valued around $1.6 trillion—is planning to launch an ad-supported tier of its Prime Video streaming service next week. That comes a little over a year after Netflix jumped into the advertising space, where it has now racked up 23 million monthly active users. But Amazon already has a digital advertising business generating nearly $44 billion in annual revenue. And its ad-based service will become the default for Prime Video viewers, leaving those who want to avoid ads having to pay an additional $3 a month. Morgan Stanley estimates that the move will land Amazon about 70 million U.S.-based advertising viewers right from the start.

On a conference call Tuesday, Netflix co-CEO Greg Peters said the company considered a similar move. “But given our long history of not having ads, we thought it was better for our members rather than force them into a change and give them ads," he added. He also noted that the ad market for connected TVs alone is around $25 billion a year, “so there’s room for multiple players, clearly." Netflix is also trying to curb expectations about the business—at least in the near term. Peters noted later in the call that “we’ve got years of work ahead of us to take the ads business to the point where it’s a material impact to our general business."

Wall Street may not be able to wait that long. Official estimates are modest; analysts see Netflix’s ad-supported revenue reaching about $2.7 billion next year, making up about 6% of the company’s total, according to Visible Alpha estimates. But Netflix is also likely reaching the tail end of the subscriber boost being generated by its crackdown on password sharing that began last year. That likely means more modest subscriber growth ahead compared with the near 30 million added in 2023.

But at least Netflix probably won’t lose what it has. Pressure from investors to stem streaming losses has companies like Warner and Disney back to licensing some of their own shows to Netflix in return for much-needed cash flow. That includes some crown jewels; 13 of the 16 movies in Warner’s DC Extended Universe franchise are currently streaming on Netflix. That helps Netflix get even more bang for its bucks; the company maintained its previously stated plan to spend around $17 billion on content this year.

Netflix is likely to keep streaming investors glued to their sets.

Write to Dan Gallagher at

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