Netflix’s decision to curb password sharing continues to pay off for the firm according to research published recently by market analysts Antenna.
Under changes first introduced in Latin America and then rolled out more widely, the streaming service now monitors the location of devices using an account and restricts access where it determines they’re being used by someone outside the account holder’s own household.
Once it’s identified a particular device as sharing someone else’s account, it offers the option of paying extra to continue the arrangement or migrating the user’s profile to their own account, thereby retaining their viewing history and watchlist.
The crackdown, as well as the introduction of a lower cost advertising-supported plan, were introduced in the wake of an April 2022 market update which saw the US Tech 100 Index firm report a fall in subscriber numbers and warn of further potential losses.
After years of solid growth, such talk sparked a drop in the firm’s share price and prompted a renewed focus on financial viability of some firm’s streaming services, ultimately prompting the sector as a whole to reconsider how it makes commissioning decisions and, in the case of studios who own a streaming service, their approach to distributing and licensing material.
News of both the password sharing clampdown and the ‘with ads’ tier were initially met with scepticism in some quarters, with predictions of mass cancellations by those sharing their account (and subscription costs) with others, and questions over whether customers would be willing to pay for a service which also included adverts.
However, the real world reaction appears to have been a lot more positive – so far.
According to Antenna’s research, 23% of all new sign-ups in July 2023 were to the ad-supported plan – that’s up 4 points on the previous month and the highest share achieved to date.
Antenna says it will be monitoring the impact of the recent withdrawal of the cheapest ad-free plan on “the composition of Netflix subscriptions and sign-ups overall in the coming months”.
Its research also shows that, despite much heated talk of sharers quitting the platform, Netflix continues to add new customers with 2.6m sign-ups in the US last month. While that’s down on the almost 3.5m US sign-ups achieved in June, it’s healthily above the preceding ten months.
As mentioned above, Netflix’s initial woes sparked a widespread rethink across the streaming sector, with profitability suddenly becoming more of a focus for both markets and management.
This has led to under-performing shows being cancelled and, in some cases, even removed from platforms as well as a greater willingness to make selected library content available to third-party services.
And the changes spearheaded by Netflix are now starting to roll out across the industry
In recent weeks Disney+ has announced both the creation of a more expensive top tier plan, which will be the only way to stream its original content in UHD, plus the international expansion of its own ad-supported plan.
The firm is also set to follow Netflix’s example and introduce restrictions on password sharing next year. Other streamers are likely to follow suit provided the results for early adopting rivals remain positive.