Netflix Will Launch Paid Sharing Plans in the US in Coming Months
Netflix announced its quarter-one earnings in an investor letter on Tuesday afternoon. While the letter did not mention password sharing, Netflix did highlight its new paid sharing program that allows subscribers to share their account with others for an added fee.
According to the letter, Netflix plans to roll out paid sharing in the US in the coming months.
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Paid sharing and a password crackdown may adversely affect US subscribers. CableTV.com found that a crackdown would most impact young people as 49% of 18-34-year-olds have shared a password, and they are way more likely to leave a subscription due to a crackdown than older folks.
But Netflix warned investors that they “see a cancel reaction in each market when we announce the news, which impacts near term member growth,” the company said. “But as borrowers start to activate their own accounts and existing members add ‘extra member’ accounts, we see increased acquisition and revenue.”
While Netflix noted that paid sharing would help them crack down on over 100 million households that share accounts, a CableTV.com survey found that most Americans don’t think password sharing is wrong.
Connecting with subscribers
Netflix is also moving away from “engagement for engagement’s sake” and focusing on connecting members with titles they’ll love and will recommend to friends and family. The Night Agent, released at the end of quarter one, has been viewed for 605 million hours, earning it a spot at #6 on Netflix’s all-time English-language series list.
But even with popular programming, subscriber growth was the weakest since quarter two of 2022, when the company lost nearly a million subscribers globally. This time, it gained 1.75 million global subscribers but only 100,000 in the US and Canada.
However, overall revenue did increase in the US and Canada, even with Canada cracking down on password sharing. In fact, the paid membership base in Canada is larger than before the crackdown. This is likely attributed to the ads plan that Netflix launched that increased revenue per subscriber.
But will popular shows and movies be enough? While Netflix believes Canada’s password-sharing crackdown is a reliable predictor of how US subscribers will react, a CableTV.com survey found that around a quarter of Americans would cancel their service to avoid a password-sharing crackdown.
All-in on streaming
As other media companies embrace theatrical releases, linear TV, and third-party licensing, Netflix reiterated its commitment to the streaming business model: “we are ‘all in’ on streaming and already generating significant profit and free cash flow,” the company said.
The company is not worried about revenue diversification and emphasized that point by shuttering the 25-year-old DVD division that launched the company in 1997.
And the company does not need to worry about linear as Nielsen found that Netflix’s original programming achieved 337 billion minutes of viewing time, beating second-place contender CBS by over 50 billion minutes.
However, there was no word on whether the streaming company will continue experimenting with live programming following the live Chris Rock stand-up special in March, its acquisition of the Screen Actors Guild Awards, and the Love is Blind reunion debacle over the weekend. (Netflix did note the stand-up special was one its “buzziest titles this quarter” and ranks as the most-streamed comedy special, according to Nielsen.)
Nielsen data also shows that Netflix and YouTube lead streaming engagement in the US. Streaming accounts for 34% of all viewing in the US, and Netflix accounts for 7% of that. The only close streaming competitors are Disney and Hulu at 5% and Amazon Prime Video at 3% engagement.