Yahoo Finance Netflix sharing crackdown triggers jump in subscribers
Netflix has posted a jump in subscriber numbers as the streaming giant’s crackdown on password sharing starts to pay off.
The US tech giant posted a 5.9m increase in subscriptions in Europe, beating analysts’ predictions of 2.07m by more than double and propelling the company to record subscriber numbers.
It comes after Netflix rolled out tough new rules requiring customers to pay an additional charge to share their account with another household.
The move, first initiated in May, is aimed at targeting the estimated 100m households worldwide who watch Netflix shows without paying.
It marks an effort to revive growth at the streaming service after years of a lax policy towards password sharing.
The “extra member” charge, priced at £4.99 in the UK, is expected to drive even more customers to Netflix’s ad-funded tier.
Netflix now has 238.4m members, an increase of 8pc from a year ago.
The rise in subscriber numbers will come as a boon to the company, which is grappling with an industry-wide slowdown in the streaming market.
The maker of The Crown and Squid Game announced its first decline in subscriber numbers in a decade last year, amid tough competition from rivals such as Disney+ and Amazon Prime.
After launching its ad-funded tier, Netflix also cut prices in more than 30 countries in a bid to rekindle growth, acknowledging the cost-of-living crisis that has forced consumers to tighten their belts.
Overall, Netflix’s sales increased 2.7pc to $8.18bn (£6.32bn), below forecasts of $8.3bn in the three months to the end of June. Net profit increased 10pc to $1.44bn.
Netflix’s share price slumped by more than 7pc in after hours trading following the update.
Analysts and investors will have a close eye on how Netflix will be impacted by a wave of industrial action across Hollywood.
Both the Writers Guild of America and actors union SAGAFTRA have walked out for the first time in 60 years amid a row over pay and the looming threat of AI.
Bosses said they expected cashflow “lumpiness” over the next year as a result of the strikes, signalling the breadth of their potential impact.
The strikes have led to a shutdown in production across Hollywood and sparked fears of a drought in upcoming blockbusters and TV series.
Ted Sarandos, co-chief executive of Netflix, has previously played down the impact of the walkouts, insisting that the company had a “pretty robust slate of releases” that would help it weather the storm.
Recent releases from the streaming giant include The Deepest Breath, a documentary about the dangerous world of freediving.
In January, Netflix founder Reed Hastings stood down as chief executive, becoming executive chairman instead. Greg Peters was elevated to the position of co-chief executive, alongside Mr Sarandos.
Earlier this year the company also announced it was shutting down its mail-order DVD service that launched its business 25 years ago.
