Netflix Password Crackdown Is Working

To the tune of millions of new customers
By Evann Gastaldo,  Newser Staff
Posted Apr 19, 2024 12:34 AM CDT
Netflix Password Crackdown Is Working
The Netflix logo is shown in this photo from the company's website, in New York, Feb. 2, 2023.   (AP Photo/Richard Drew, File)

Netflix's decision to crack down on password sharing may not have been a popular one, but apparently it was a smart one for the streaming company. In its earnings report Thursday, the company announced an addition of 9.33 million subscribers in the first quarter, an increase of more than five times what it added during the first quarter of last year and its strongest number of first-quarter subscriber additions since the COVID pandemic began, the Wall Street Journal reports. Netflix announced that, starting with the first quarter of 2025, it will no longer report subscriber increases each quarter. Alex Sherman at CNBC says the move "suggests Netflix's second wave of subscriber growth from its crackdown on password sharing could slow down next year."

Sherman adds, however, that "It's also a sign the company wants to be judged by mature metrics such as revenue, earnings and free cash flow." The competition between streaming companies has been largely focused on subscribers, but we're years in now, and outlets note that it's clear Netflix is the dominant force. From its shareholder letter: "In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential. But now we're generating very substantial profit and free cash flow (FCF). We are also developing new revenue streams like advertising and our extra member feature, so memberships are just one component of our growth." Also contributing to Netflix's subscriber numbers is the streamer's recent addition of a $6.99 ad-supported tier. (More Netflix stories.)

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