Netflix's recent crackdown on password sharing in the United States has resulted in a significant surge in new subscriber sign-ups, surpassing the growth seen during the early days of the Covid pandemic.
Netflix's Password-Sharing Ban Triggers Sign-Ups Surge
According to data collected by streaming analytics company Antenna, Netflix experienced its largest influx of new users in the United States in late May, marking a milestone for the streaming service.
Antenna's data revealed that on May 26 and May 27, shortly after the crackdown was implemented, Netflix added 100,000 new accounts each day.
Moreover, in the days that followed, Netflix witnessed a remarkable increase of over 100% in sign-ups compared to the previous 60-day average.
The analytics firm noted that these sign-up spikes exceeded those observed during the initial Covid-19 lockdowns in March and April 2020. While there was also an increase in account cancellations during this period, it was not as substantial as the surge in new sign-ups.
Upon the release of this data, Netflix's shares experienced a boost, rising by almost 2% in early trading. Over the past month, the company's shares have climbed by more than 27% to approximately $415, CNN reports.
Gaining Back Significant Loses
In the past, Netflix disregarded password sharing as it contributed to its growth. However, the streaming giant experienced significant subscriber losses last year and recognized that password sharing negatively impacted its revenues and hindered its ability to invest in new content.
Netflix estimated that over 100 million households had shared their login information with individuals outside their residences.
To address this issue, the company has implemented new guidelines allowing U.S. users to include an additional member from outside their homes for an extra fee of $8 per month.
Moreover, Netflix intends to prevent unauthorized users from accessing accounts with shared passwords. Before taking action in the United States, Netflix had already begun tackling password sharing in other countries, including Canada, New Zealand, Portugal, and Spain.
During an earnings call, Netflix acknowledged that subscribers initially reacted negatively when the paid sharing option was announced, leading to cancellations. However, the company also observed subsequent increases in acquisitions and revenue.
Expert's Insight
Variety reports that analysts like Jeffrey Wlodarczak from Pivotal Research Group believe that Netflix's strategy of monetizing the over 100 million households worldwide that engage in password sharing without paying for their subscriptions could lead to a solid subscriber and financial results.
Wlodarczak notes that as the dominant streaming video player globally, Netflix has strong long-term growth potential and massive scale economies, which could be further enhanced by introducing the company's ad-supported plan.
In Other News
According to reports, Spotify is developing a feature called "Your Offline Mix" to enhance offline listen for users with restricted or no internet connectivity.
This feature will generate a playlist automatically, comprising recently played songs. It enables users to relish their preferred tracks even when internet access is unavailable.
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