In recent times, Netflix has been working on reducing password sharing among subscribers. This has been a long-standing issue that has cost the streaming giant a significant amount of revenue.
The streaming company added nearly 6 million paying subscribers, an increase of 8 percent, during the second quarter of 2023.
The results confirm earlier reports from third-party data that suggested the tightened restrictions were working. Shares of the streaming video pioneer were down 3% in after-hours trading at $463.61 a share.
In a letter to shareholders, the company said that its push to stop password sharing hasn’t resulted in mass cancellations and has instead encouraged more people to sign up for their own account. “The cancel reaction was low and while we’re still in the early stages of monetization, we’re seeing healthy conversion of borrower households into full paying Netflix memberships as well as the uptake of our extra member feature,” the company wrote.
The Crackdown on Password Sharing
Netflix has been cracking down on password sharing among subscribers. The company has been testing a feature that would require users to verify their account through a text message or email.
If the user is unable to verify their account, they would need to create a new account or subscribe to Netflix themselves. Additionally, Netflix has been limiting the number of devices that can stream content simultaneously on one account.
In addition to restricting account sharing, the company has started offering “paid sharing,” which allows subscribers to pay to add an “extra member” to their account for $8 a month. That option is now available in more than 100 countries, according to Netflix.
The company has also been streamlining its plans, confirming that it canceled its $10 “basic” plan in the United States and UK after first axing the plan in Canada.
Now, Netflix says it will continue to restrict password sharing in the few remaining countries where it hasn’t already done so, including India, Indonesia, Kenya and Croatia.
The company notes it won’t be offering its “extra member” option in these regions as it’s already slashed prices in many of these countries. Instead, the company says people can use its tool to transfer their profile to a fresh account.
The streamer also briefly touched on the ongoing strikes among Hollywood's actors and writers, noting that it had lowered the estimates — by $1.5 billon — of how much cash it was expecting to spend due to the ongoing strike.
But during a live streamed interview on the company's results, co-CEO Ted Sarandos said the company didn't want a strike. "We're at the table and we're going to try to get to an equitable solution," he said.