Netflix Successfully Reduces Password Sharing, Gains 5.9 Million Subscribers
According to a statement released by the firm today, Netflix has succeeded in reducing the amount of password sharing that takes place in the United States and other countries, which began earlier this year. The most recent earnings report released by Netflix indicates that the company added 5.9 million new customers worldwide in the second quarter of 2023, including more than one million in the United States and Canada [PDF].
Crackdown on Password Sharing Boosts Netflix Subscriber Count
In light of these findings, Netflix has decided to move through with plans to introduce paid sharing in “almost all” of the remaining countries where the new policies have not yet been implemented. The United States version of Netflix stopped allowing multi-household password sharing in May, which almost immediately led to an increase in the number of people signing up for the service.
Positive Impact of Paid Sharing on Netflix Revenue
According to Netflix, there has been an increase in sign-ups compared to cancellations in every location where paid sharing has been implemented. The company’s revenue increase was 2.7% higher than the previous year. Netflix anticipates that it will begin to experience the full benefits of paid sharing and additional acceptance of its ad-supported plan in the near future, which would cause the company’s revenue growth even faster.
End of Account Sharing and Implications
For many years, Netflix enabled its subscribers to share their accounts with persons not members of their immediate household; however, this practice is no longer permitted. Because Netflix restricts access based on an individual’s IP address and other location data, Netflix accounts can only be accessed by others who live in the same physical place. Netflix made available the necessary facilities for account sharers to join up for their individual accounts.
Netflix stated that more than 100 million households were sharing accounts, which hindered the company’s capacity to “invest in and improve Netflix” for paying subscribers. Netflix also stated that this practice was illegal.