The news: Netflix reported a 16% year-over-year revenue increase for Q4 2024, reaching $10.25 billion, above the $10.11 billion expected.

• The company added 19 million paid memberships during the quarter, its largest-ever quarterly gain, bringing total global memberships to 302 million.
• Operating income surged 52% year-over-year to $2.27 billion, with an operating margin of 22%.
• EPS more than doubled, reaching $4.27 compared to $2.11 in Q4 2023.
• Over 55% of sign-ups in ad-supported markets came from the ads plan, with ad memberships growing nearly 30% from Q3 2024.

Pricing power: Netflix raised its US Standard plan from $15.49 to $17.99 per month, the first hike for this tier in three years. The Premium plan increased by $2 to $24.99, and the ad-supported tier rose from $6.99 to $7.99—the first increase since its 2022 launch.

• Price increases also hit Canada, Portugal, and Argentina.
• Netflix's ability to implement successive price hikes without significant churn speaks to its strong content slate and entrenched market leadership. However, as competitors like Disney+ and Amazon Prime Video also raise prices, consumer patience may be tested.

Engagement drivers: Content and strategy evolution show clear momentum.

• Viewers flocked to hits in Q4 like “Squid Game” season 2, the record-breaking Jake Paul-Mike Tyson boxing match, and its Christmas NFL games.
• Netflix's expansion into live sports like the NFL and WWE marks a significant push into territory traditionally dominated by broadcast networks.

Why it matters: Netflix's strategic shifts indicate broader industry evolution.

• Analysts project advertising revenues will become a major contributor by 2026 as Netflix enhances targeting capabilities and builds brand partnerships.
• The success of live sports and special events suggests Netflix can effectively compete against traditional broadcasters for premium content rights.
• Strong performance across both subscriber growth and engagement metrics positions Netflix to implement price increases across its service tiers.

Our take: Netflix's Q4 performance demonstrates successful adaptation to streaming market demands, but future growth depends on careful balance.

• While live content and advertising show early promise, the platform must manage price increases and content investments without alienating subscribers.
• Netflix’s claim that it won’t focus on large regular season sports packages leaves room for a strategy shift, senior analyst Ross Benes notes. But don’t be surprised if the company reconsiders and adapts, as it has with past pivots.
• Netflix's ad-supported tier continues to show strong uptake, positioning it as a key revenue driver. The company plans to expand its first-party ad tech platform to the US in 2025.
• With only 6% penetration of the estimated $650 billion global entertainment market in its operating regions, Netflix still has substantial room for growth, particularly in Asia and Europe.