Netflix has exceeded expectations on Wall Street for subscriber growth, with a significant factor being its crackdown on password sharing and the introduction of a cheaper ad-supported tier. This successful strategy is expected to influence competitors like Disney and Warner Bros. Discovery, who plan to implement similar measures this year. In the first quarter, Netflix gained 9.33 million subscribers globally, double what was anticipated by analysts.
The company’s campaign against password sharing has led to an increase in new sign-ups, along with the introduction of a more affordable, ad-supported option. The ad-supported tier costs $6.99 per month, cheaper than adding a member outside of your household for $7.99 per month. This approach has converted many freeloaders into paid users, as evident from the surge in subscriptions.
Analyst Ross Benes noted that the unexpected growth in subscribers indicates that password sharing was more prevalent than previously thought. Macquarie’s research suggests that nearly 100 million users share their passwords, presenting a significant growth opportunity for Netflix. Additionally, the ad-supported tier recorded a 65% increase in subscribers quarter on quarter.
Disney and Warner Bros. Discovery are now gearing up to implement similar measures to reduce password sharing on their platforms. Disney+ is set to implement restrictions this summer, with a full crackdown scheduled for the fall. The same applies to Warner Bros. Discovery, which will begin limiting password sharing at its Max streaming service later this year. While Netflix’s competitors are adopting its successful strategies, the company remains poised for further growth and success in the streaming industry.