In its second quarter earnings report, Netflix announced that it had gained 5.9 million subscribers globally from April to June. The US and Canada accounted for 1.17 million of these new members. This comes after Netflix implemented a password-sharing crackdown in the US in late May, where users were notified of an additional $7.99 per month charge for sharing passwords.
Following the crackdown, data from analytics company Antenna showed a significant spike in subscribers. Building on this success, Netflix is now planning to address password sharing in all its remaining countries. The streamer has already introduced paid sharing in Canada, New Zealand, Portugal, and Spain.
Netflix reported that revenue is now higher in each region than before the crackdown, and signups are outnumbering cancellations. The company also noted a healthy conversion of borrower households into full paying Netflix memberships, as well as increased user activity of adding extra members to their accounts.
Despite the positive subscriber growth and revenue, Netflix faces challenges due to the ongoing Hollywood writers and actors strike. The strike is expected to limit the release of new content, impacting popular shows like Stranger Things, Big Mouth, Emily in Paris, and The Sandman. As a result, Netflix lowered its free cash flow estimate for 2023 from $3.5 billion to at least $5 billion due to lower cash content spend.
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Netflix’s ad-supported tier, priced at $6.99 per month, contributed to the streamer’s 3 percent year-over-year increase in revenue. Although it had a slow start, the ad-supported tier gained 5 million users globally in May. Netflix enhanced the tier by enabling support for 1080p video and the ability to watch two streams simultaneously. As part of its advertising strategy, Netflix withdrew access to the cheapest ad-free plan in the US, UK, and Canada.
As Netflix’s earnings call took place at 6PM ET, The Verge would provide further updates if any significant announcements were made. It is worth noting that The Verge has recently collaborated with Netflix on a series.
In conclusion, Netflix’s password-sharing crackdown seems to have positively impacted its subscriber growth and revenue. The company’s expansion of paid sharing to additional countries indicates its commitment to addressing this issue. However, the Hollywood strike poses challenges for new content production, and Netflix’s focus on advertising is changing its pricing and plans. Despite these factors, Netflix remains a dominant force in the streaming industry.
