Netflix (NFLX) reported earnings for the last quarter of 2023 a day after its film chief Scott Stuber announced his resignation. On a call with analysts yesterday (Jan. 23), Netflix co-CEOs Ted Sarandos and Greg Peters were pressed to answer questions about the company’s content strategy following Stuber’s scheduled departure in March, and the two leaders reassured investors that content production will remain a focus in 2024.
For the quarter ended December 2023, Netflix reported a revenue of $8.8 billion, up 12 percent from a year ago and double the rate at the end of 2022. Quarterly net income came at $938 million, a dramatic jump from the $55 million the same period last year. Profitability also improved significantly, as operation margins increased to almost 17 percent in the fourth quarter from 7 percent the year prior. Netflix shares jumped 10.8 percent to $545 today (Jan. 24) on the earnings results.
The departure of Stuber, who brought in Oscar-winning directors to Netflix, is seen as a major loss for the company. During his seven years with the streamer, Stuber built Netflix’s films division into a studio that could stand next to Hollywood’s established players all while avoiding theater releases. This year marks the fourth time Netflix has the most nominated films at the Academy Awards. The studio had the top nominations in 2020, 2021 and 2022.
Sarandos said on yesterday’s call his film strategy will remain unchanged in 2024 given the success of Netflix original films in 2023. According to rankings by the media analytics company Nielson, Netflix original films dominated the No.1 spot 41 out of 52 weeks in 2023, compared to 25 in 2022. Successful titles from last year include The Mother starring Jennifer Lopez and Adam Sandler’s animated film Leo, as well as non-English movies like Nowhere and Society of the Snow.
“Our original films do outperform those licensed films, and they do uniquely distinguish us from the competition,” Sarandos said on the earnings call. “Just this morning, our original films got 18 Oscar nominations across 10 different films. So we do not plan to change our strategy or the mix.”
Netflix plans to increase its spending on content by $4 billion from last year to $17 billion in 2024, the company said in its previous quarterly earnings report in October 2023.
Sarandos and Peters also discussed Netflix’s licensing strategy in series and gaming. Netflix continues to license popular shows from networks like HBO. It recently inked a deal with Warner Bros. Discovery (WBD) to stream the Sex and the City series. Sarandos also touted the streamer’s ability to “resurrect” old shows, like it did with Suits. He said studios are more open to working with Netflix in this way. “I believe because of our distribution heft and our recommendation system that sometimes we can uniquely add more value to studios’ IP than they can,” he told analysts.
Peters said Netflix will continue to license games on its platform after seeing gaming engagement triple last year. “We’re going to look for more great licensing and some exclusive licensing, so we can do things more like what you’ve seen us do last quarter with GTA (Grand Theft Auto), but also other titles like Football Manager 2024, which performed very well for us,” Peters said.
This story has been updated to reflect the accurate increase in content spend by Netflix in 2024.
