Netflix’s new policy of cracking down on password sharing seems to be having the desired effect, as the streaming giant has seen a boost in its subscriber base. The company notified its members in May that it was changing its sharing guidelines, and since then, it has had its four largest days of signing up US customers.
The New Policy and Its Effect
The new policy, which began on May 23, stipulates that Netflix accounts can only be shared within the same household. The company has given two options for people outside of the household who are using passwords belonging to members. The first option is to transfer the profile to the person outside of the household so that they can start a new membership that they pay for on their own. The second option is for the member to pay an extra fee of $7.99 a month per person outside of their household.
Since the email began rolling out, Netflix has witnessed a 102% increase in its average daily signups, with nearly 100,000 daily signups on two of the days, according to data provider Antenna. This increase in signups surpassed the spike in sign-ups during the initial lockdowns of the pandemic. Average daily signups to Netflix reached 73,000, up from the prior 60-day average.
Other Revenue-Boosting Measures
Netflix’s subscriber growth began to stagnate in 2022, and the company began to focus on ways to boost revenue. Apart from cracking down on password sharing, Netflix also introduced a cheaper, ad-supported tier. The stock took a hit last year after reporting its first subscriber decline in a decade. However, since the introduction of password-sharing guidelines and ad-supported streaming, the stock has rebounded. It hit a 52-week high on Friday and is up more than 40% year-to-date.
In addition to the new policy, the company has said that more than 100 million households share accounts, affecting its ability to invest in new content. Netflix had delayed its crackdown on password sharing in the US from the first quarter to the second quarter. It had previously begun rolling out password-sharing guidance in international markets earlier this year.
Netflix’s new password sharing policy has been successful in boosting its subscriber base. Alongside other revenue-boosting measures, such as introducing a cheaper, ad-supported tier, the company has seen a significant rise in its stock. The company’s crackdown on password sharing is likely to continue, as it aims to invest in new content and maintain its position as the leading streaming platform.
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