Netflix’s Password Sharing Crackdown Leads to Spike in Account Sign-Ups
Netflix’s password sharing crackdown seems to be working.
The streamer rolled out its paid sharing feature, which deters users living outside of a household from sharing a Netflix account, in the U.S. on May 23. For the six-day period from May 23 to May 28, Netflix averaged 73,000 daily sign-ups, with both May 26 and May 27 bringing in nearly 100,000 new sign-ups, according to the analytics firm Antenna.
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May 25 to May 28 represented the four single largest days for U.S. user acquisition since early 2019, when Antenna began tracking sign-ups for the streaming service. The May spike in sign-ups also surpassed those seen during March and April in 2020, when users signed up for Netflix in droves during the early months of COVID lockdowns.
As expected, the streamer did see an increase in cancellations during the six-day period, though Antenna noted that sign-ups eclipsed cancellations. The analytics firm declined to share the exact number of cancellations found in its research.
The password crackdown comes as Netflix seeks to boost subscriptions and further monetize its user base as streaming growth across the industry has slowed over the past year. The early numbers for U.S. figures post-password crackdown appear to follow the early success seen in regions like Canada, where Netflix launched its paid sharing feature in February. In April, Netflix said in its Q1 quarterly earnings letter that its paid membership base in Canada had grown “larger than prior to the launch of paid sharing,” with revenue “growing faster than in the U.S.” as a result.
The paid sharing feature could work neatly with Netflix’s ad-supported subscription tier, which Netflix’s top advertising executive Jeremi Gorman said had nearly 5 million monthly active users in May. (The streamer has not disclosed specific figures on total ad-tier subscribers.) And if enough primary account holders opt to add an outside user onto an account for $7.99 a month, which is more than the cost of the ad-supported tier, Netflix could see another boost to its ARPU.
Bank of America Securities analyst Jessica Reif Ehrlich described the two features as “inextricably linked” in a May 19 note. “At the $6.99 price point, the ad-supported tier … provides an attractive low-priced option for ‘borrowers’ who still wish to access the Netflix service,” Erlich wrote. “We think the broader crackdown on password sharing will be an accelerant to [Netflix’s] ad-supported tier.”
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