Netflix's Password Sharing Crackdown Leads Subscriptions To Climb
In a long-anticipated move, content streaming giant Netflix officially cracked down on password sharing amongst U.S. customers on May 23. The new policies asked subscribers to pay an extra $7.99 per month for up to two additional users who live outside the account holder's household, which is a $2 per month discount versus what the same plan would cost on a standalone basis.
While easing password sharers into amnesty with a discount was a nice touch, what was conspicuously absent from the announcement was the consequences of not complying. As it turns out, it was taken pretty seriously. According to the Wall Street Journal, citing data from analytics company Antenna, Netflix gained more new subscriptions in a four-day period in the U.S. compared to any other four-day period for the livestreaming service since 2019.
NEW on the Antenna Blog: A first look at the impact of Netflix's pw sharing crackdown. In the first 6 days since they implemented the new policy, Netflix has had the 4 single largest days of US user acquisition in the 4.5 yrs that Antenna has been measuring the streaming service. pic.twitter.com/rDYGxR43Qm
— Antenna (@AntennaData) June 9, 2023
In particular, the dates of May 26 and May 27 experienced almost 100,000 signups per day as a result of the password crackdown.
Cancellation threats may have been a bluff
In a January 2023 conference call, Netflix CEO Greg Peters expressed concern that there could be a cancel reaction to the crackdown among subscribers. That concern appeared to be well founded when a "#CancelNetflix" hashtag started trending, followed by a Jefferies survey where 62% of password sharers said they would stop using the streaming service before they would open their own account.
According to Antenna, cancellations did increase, but not nearly as much as new sign-ups. In fact, the ratio of sign-ups to cancellations grew more than 25% versus the prior two-month period. Besides paying $7.99 per month for additional profiles outside the household, account holders were also given the option of transferring the Netflix profile of a password-shared member to begin their own independent subscription.
The streaming giant appears to be optimistic about the consequences of the stricter Netflix password sharing policy, with several analysts raising their year-end price target for shares of the company. Netflix stock is already up approximately 40% year-to-date.