Netflix’s new subscriber counts soared amid password sharing crackdown

On May 23, 2023, more than a year after making its first announcement regarding the password sharing crackdown, Netflix (NASDAQ: NFLX) began limiting account access to only people living in the same household. Ahead of Netflix’s FY23 Q2 earnings call, Bloomberg Second Measure’s consumer transaction data shows that the streaming platform experienced a spike in new U.S. subscribers in the week of the password sharing crackdown rollout and the company’s subscriber acquisition remained elevated over the following weeks.

Netflix’s (NASDAQ: NFLX) spike in new U.S. subscribers corresponded with the password sharing crackdown

Consumer transaction data shows that during the week of Netflix’s password sharing crackdown rollout (defined here as the week ending on May 28, 2023) the streaming platform saw its new U.S. subscriber count jump 117 percent week-over-week. 

Netflix’s subscriber acquisition continued to grow in the subsequent two weeks, with its U.S. subscriber count up 59 percent week-over-week during the week ending on June 4, 2023, and up 35 percent week-over-week during the week ending on June 11, 2023. 

After the initial spike in the first three weeks following the password sharing crackdown, Netflix’s new subscriber growth slowed during the week ending on June 18, 2023. However, the streaming platform’s new subscriber count remained elevated that week compared to the week before the password sharing crackdown was introduced (defined here as the week ending on May 21, 2023). Specifically, Netflix’s new subscriber count grew 236 percent between the weeks ending on May 21, 2023 and on June 18, 2023. The company’s new subscriber count was also elevated during the week ending on June 25, with new subscribers up 204 percent compared to the week ending on May 21, 2023. 

Netflix looks to new initiatives to counter its subscriber growth slowdown

Netflix’s decision to crack down on password sharing comes after the company experienced its first net subscriber loss in over a decade. In the letter to shareholders published in April 2022, company executives stated that high household penetration and password sharing are among the main factors behind slowing growth. The letter estimated that, at the time of its publication, over 100 million households worldwide, including over 30 million in the U.S. and Canada region, shared Netflix passwords.

Among Netflix’s other initiatives aimed at increasing its subscriber acquisition is the introduction of the Basic with Ads plan, a less costly alternative to the streaming platform’s ad-free plans. Netflix introduced the new subscription tier in November 2022, setting the monthly subscription price in the U.S. at $6.99, while monthly subscription to Netflix’s ad-free plans, following the company’s subscription price increase introduced in January 2022, starts at $9.99. According to Netflix, nearly 5 million subscribers globally signed up for the ad-supported plan six months after it was introduced.

Bloomberg Second Measure launched a new and exclusive transaction dataset in July 2022. Our data continues to be broadly representative of U.S. consumers. As a result of this panel change, however, we recommend using only the latest post in assessing metrics, and do not support referring to historical blog posts to infer period-over-period comparisons.

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