Fears that consumers would be ditching subscription services in their droves have proved wide of the mark with Netflix sales surging to 12.5% to £7bn in its last quarter while other services have boosted both sign-up and retention rates.
Netflix’s results show the streaming giant added over 13 million subscribers in the three months to the end of December, which coincided in a crack down on customers sharing subscriptions, superseding growth in any quarter since the peak of the pandemic in 2020.
The company said it expected “strong growth” in its advertising business in 2024, although it acknowledged this was off a small base and it was not yet a “primary driver” of its sales growth, adding that “Our aim is to make ads a more substantial revenue stream that contributes to sustained, healthy revenue growth in 2025 and beyond”.
Peters said it planned to build its “technical advertising features” and it planned to launch more ad products.
The results coincide with the publication of Recurly’s 2024 State of Subscriptions report, which confirms subscriber fatigue is overestimated and growth continues to be strong.
Data shows that while acquisition rates and free trial conversions went down – correlated to a market-wide reduction of acquisition spend and “growth at all costs” mentality – overall subscriber retention improved.
The median trial-to-paid conversion rate was 50%, measuring the proportion of trial users who transition into paying subscribers, confirming consumers still favor trials.
Meanwhile, the median sign-up success rate stood at 89%, which measures the percentage of initial subscription transactions that were approved. This metric is significant, as it reflects the effectiveness of the checkout process and backend payment processing.
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