Netflix’s crackdown on password sharing is working — for now

Unless The company motto should still be: Never ignore Netflix. On Wednesday, the streaming giant beat Wall Street forecasts by reporting a gain of nearly 9 million new subscribers worldwide and revenue of $8.5 billion for the third quarter of 2023, up nearly 8 percent corresponds to the previous year. While this all sounds like a bunch of financial brouhaha, it’s also notable given the very turbulent three years the company – and Hollywood – have had.

Consider the company’s crackdown on password sharing. The long-planned Killjoy campaign launched in May 2023 in the US and UK. It followed a turbulent period for streaming, as Netflix faced increasing competition from new streamers like Disney+ and HBO Max (now known as Max) and was losing subscribers to the For the first time in a decade. The move to eliminate password sharing — which essentially locks out users who don’t appear to live in the same household as the account holder — also came shortly after the streamer increased its much-touted ad-supported level of $7 per month.

For months, it seemed like Netflix’s changes to plans, pricing and password enforcement were the moves of a company feeling the pressure of additional competition and a loss of cool in the public eye. Analysts were the same this week Lowering the company’s share price Predictions amid rumors that users wouldn’t switch to the new ad-supported tier in droves. And yet, in one Letter to investors In announcing the company’s quarterly results on Wednesday, Netflix noted that membership in its ad-supported plans increased nearly 70 percent compared to the previous quarter. The streaming giant also said it has rolled out “paid sharing” – which allows users to share accounts for an additional fee – to every region where Netflix is ​​available.

“Cancelation response continues to be low and exceeds our expectations, and households of borrowers moving to full-paying memberships are demonstrating healthy retention,” Netflix told shareholders. In other words, previous password exchangers aren’t canceling the service out of disgust, and Netflix now has more than 247 million paying subscribers around the world.

But will all of these subscribers stay long-term? This is an open question. In addition to the massive increase in subscribers, Netflix also announced another price increase on Wednesday. Effective immediately, the company said the cost of the streamer’s Basic plan would increase from $9.99 per month to $11.99 for people in the US, UK and France. The Premium plan, meanwhile, increases from $19.99 to $22.99. (Prices for the $6.99 ad-supported tier and $15.49 standard plan remain unchanged.) It’s been more than a year since Netflix last raised prices, but if the streamer continues to charge more money and at the same time Limits the number of people who can use each plan When subscribing, some subscribers may decide that Netflix isn’t worth it.

Speaking of advantages: the Hollywood strikes. Even though the Writers Guild of America has reached an agreement with studios and screenwriters are back to work, actors continue to strike, causing many productions to stall. For now, Netflix can carry on Suitswhich has seen a strange surge in popularity on the platform in recent months, and Love is blind, but ultimately, by throttling the content pipeline, the strike could leave the streamer with fewer offerings to attract or retain subscribers. Earlier this month, The Wall Street Journal reported After the actors’ strike ends, Netflix could increase prices. It is possible that the increases announced on Wednesday are price increases diary However, if Netflix’s costs rise again, the company will have to offer customers more to prove that it offers the same value.

To be fair, Disney, Paramount and Warner Bros. Discovery all have them have recently increased their own streaming prices, so Netflix’s move is anything but unusual. But the more streamers increase their prices, the fewer services people are likely to want to pay for.

Netflix may be converting smooching nieces, nephews and ex-lovers into paying subscribers for now. But Karl Bode recently noted in Techdirtit’s possible that the company’s recent revenue increases “are due to a popular new show or organic growth, and not necessarily Netflix’s allegations against password-sharing accounts.” The move is working so far, but perhaps not forever.