Netflix adds six million subscribers following password-sharing crackdown

Users can no longer offer people beyond their immediate family access to their accounts

Netflix ended the last quarter with 238 million subscribers. Bloomberg
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Netflix on Wednesday said subscriptions to the media streaming service climbed by about six million in the wake of its crackdown on password-sharing.

The streaming platform finished the recently ended quarter with a total of 238 million subscribers and a profit of $1.5 billion, according to an earnings release.

The pickup in subscribers came as a potentially crippling writers and actors strike hits the US entertainment industry, but analysts say Netflix is better positioned than its rivals to weather the storm.

"We are constantly at the table negotiating with everyone across the industry," Ted Sarandos, co-chief executive of Netflix, said during an earnings presentation.

"We need to get this strike to a conclusion so that we can all move forward."

Revenue came in lower than expectations with Netflix posting $8.2 billion in sales over the April to June period, pushing the company's shares down more than 8 per cent in after hours trading on Wall Street.

Netflix in May expanded its crackdown on users sharing passwords with people beyond their immediate family as it seeks to shore up revenue after a rough patch last year.

Earlier this year, the company complained that more than 100 million households were sharing accounts at the service.

"Let's face it, the crackdown on passwords is working," Louis Navellier, chief investment officer at Navellier and Associates, said of Netflix.

"I was ecstatic with the results; I think they hit the ball out of the park with subscriber growth."

In its earning statement, the company said that the policy would expand to all its markets worldwide.

To convert non-paying users, Netflix has introduced "borrower" or "shared" accounts, in which subscribers can add extra viewers for a higher price or transfer viewing profiles to new accounts.

Netflix launched an ad-subsidised offering around the same time as the crackdown, and on Wednesday eliminated its lowest priced ad-free plan that cost $10 a month in the US.

"The decision to cut its basic tier is an effort to bolster advertising by elevating the price difference between its advertising and non-advertising tiers," said Insider Intelligence principal analyst Ross Benes.

A Netflix ad-supported subscription is available in the US for $7 monthly.

Actors on strike

The earnings report came as Netflix and other film and television makers have had to halt productions due to an actors' and writers' strike in the US.

Screen Actors Guild Sag-Aftra members joined writers who have been on strike for weeks, triggering the first industry-wide walkout for 63 years and effectively shutting down Hollywood.

"Our experts say that Netflix is best positioned to weather the strike compared to competitors, but it could start to feel pressure if its content pipeline gets increasingly strained," said Third Bridge analyst Jamie Lumley.

Sarandos said on an earnings call in April that the company has a "pretty robust slate of releases" and a large base of coming films and shows from around the world to help it endure a strike.

The company touted the success of fresh Murder Mystery and Extraction films, as well as series such as Bridgerton, The Witcher and Never Have I Ever.

"This year we'll have more returning seasons than any other streamer," Netflix told shareholders, sharing a list that included The Crown and Virgin River.

Updated: July 20, 2023, 7:21 AM