Netflix has surpassed Wall Street’s predictions for subscriber growth, thanks to a crackdown on password sharing and the introduction of a cheaper, ad-supported tier. In Q1, the company added 9.33 million subscribers worldwide, twice what analysts had predicted. This success indicates a wider issue of password sharing among users.
Netflix’s ad-supported tier, priced at $6.99 per month, has experienced significant growth quarter on quarter, with over 40% of new signups in markets that offer the ads tier choosing this option. This suggests a shift towards monetizing freeloaders and turning them into paid users.
Disney and Warner Bros. Discovery are set to follow suit with their own password-sharing restrictions, with Disney+ expected to make changes this summer and Warner Bros. Discovery planning to take action later this year. The success of Netflix’s approach is setting a precedent for its competitors.
According to Macquarie, there are approximately 100 million users who share passwords, indicating a significant market potential for converting these shared accounts into paid subscriptions. While the crackdown may provide rivals with a roadmap to follow, Netflix remains ahead of the curve in terms of subscriber growth and strategy.
