Netflix Claims Its Password Sharing Crackdown Was A Smashing Success, But…
from the nickel-and-dime dept
We noted how as Netflix growth has stalled internationally, the company has turned to nickel-and-diming its existing customers in order to give Wall Street its beloved quarterly returns at any cost. That has included not only last year’s price hikes, but this week’s decision to eliminate the company’s cheapest ad-free tier in both the US and UK.
Then there’s the company’s password sharing crackdown. For more than a decade Netflix encouraged password sharing to boost growth. Now that growth is slowing and the company is facing greater competition, it has chosen to nag account owners into paying $8 extra per moocher. It’s effectively double dipping, since Netflix already raises rates and charges users more for simultaneous streams.
Plenty of users complained about Netflix’s about face on password sharing. And some early surveys suggested that it was possible that Netflix might lose more subscribers than it gained. But in a letter to investors regarding the company’s Q2 ’23 earnings, the company claims the entire gambit was a smashing success (though I’m not sure they’d be entirely honest if it wasn’t):
“Revenue in each region is now higher than pre-launch, with sign-ups already exceeding
cancellations.”
That single sentence resulted in a lot of headlines like the BBC’s “Netflix Password Crackdown Fuels Subscriber Surge” or the Wall Street Journal’s “Netflix Password-Sharing Crackdown Delivers Jolt of New Subscriber Growth.”
But while Netflix does breakdown subscriber totals in earnings (it saw 1.17 million new members from April to June in the U.S. and Canada, and almost 6 million worldwide), it isn’t required to really detail the how and why of those signups. So it’s possible this revenue boost could be due to a popular new show or organic growth, and not necessarily due to Netflix’s scolding of password sharing accounts.
If you look at global Netflix subscriber growth, it’s about where you’d expect it to be, password sharing or not. Not as solid as Q4 2022, but not as bad as Q1 2023. But again, compare subscriber additions to what Netflix was enjoying just a few years ago, and you can clearly see why Netflix is worried about Wall Street perceptions and looking for ways to squeeze more from existing users:
Netflix saw its net income jump to $1.49 billion from the previous’ quarter’s $1.44 billion (they should probably pay their creatives), but again it’s not actually possible to determine if that had anything to do with the password sharing crackdown or is just ordinary growth.
Most folks still see Netflix as a decent value, especially when compared to traditional, bloated cable TV bundles. But that doesn’t mean it’s a great idea for Netflix to push its luck, especially given the surge in streaming competitors like Hulu, Amazon, Apple, Disney, and everyone else. Not to mention the growing public animosity toward the general dipshittery going on among executives in the streaming sector.
Making your product steadily more expensive with greater restrictions and lower overall quality may please Wall Street bean counters on the short term (see: Cory Doctorow’s enshittification), but over the longer term it inevitably frustrates your customer base, tarnishes your brand, and gives your competitors a path toward eroding your market share simply by being slightly less annoying. You can shovel the tallies around from quarter to quarter to put on a good show, but eventually the check comes due.
Filed Under: cable tv, competition, earnings, password sharing, streaming, tv, wall street
Companies: netflix
Comments on “Netflix Claims Its Password Sharing Crackdown Was A Smashing Success, But…”
I cancelled my subscription that was active since Netflix started serving Brazil. And, surprise surprise, none of the people that shared my 4 simultaneous streams earlier subscribed.
Many people I know decided to reduce their plan and got frustrated because there’s no Full HD option for them. And some decided to drop entirely. With the amount you pay for Netflix you can have 5 other streams along with added free shipping and other benefits (most stream companies struck deals with retailers here).
And all this after they did a massive PR campaign to obfuscate the bad taste this password idiocy created (they brought mfck THOR to have some time with fans!!!!! the bastards almost had me there) but in the long term I don’t see them faring too well. Not they are going to turn huge losses but they did create bad faith. And this is neve3r good in the long term.
It’s a pity Netflix got enshitificated. They are the only stream with decent user interface and stability wherever you want to watch them. But people will realize they can go without just fine. As they did with cable.
Re: Canceled my account
Same here, we had Netflix in the US since they mailed us DVDs. We were paying for 4 streams so that my mother-in-law and disabled sister-in-law could also watch netflix if they so chose. After the changes I canceled my account completely and they didn’t sign up so they went from 4 streams with usually at most 1 being watched at a time to 0 streams. I have so many other options that it’s not really missed.
So thanks Netflix for helping me save ~$25/month for something I don’t even need.
Re: streamers ui is awful
I’ve given up trying to find new things. I just search for what I want to see directly. Find out about stuff by word of mouth. The so-called algorithms don’t work.
Isn’t Hulu majority owned by Disney? So that should be “streaming competitors like Disney, Amazon, Apple, Disney, and everyone else.” With “everyone else” being Paramount+.
Because I said so
I can’t say for sure, but I doubt TechDirt is gonna be the force that finally makes the narcissistic dandy fucks running corporate America understand the concept of “next week”. I’m rooting for you.
Do we know whether these were actually “signups” in the sense of full paying accounts? I believe the official password-sharing alternative does involve new login credentials, which may or may not count as “subscribers” or “signups”. And I’m sure that people who signed up for the now-obsolescent ad-supported plan did count as “subscribers”, even if they brought in less money than traditional subscribers.
What’s the basis for the statement “Most folks still see Netflix as a decent value”? There are some 7 billion “folks”, of which less than 240 million use Netflix (according to Wikipedia, whose citation suggests is erroneously quoting a subscriber count as a user count).
By the way, if you’re gonna complain about the need for editing with AI-generated stories, you should probably learn how words like “breakdown” work. Per the general pattern followed by probably thousands of phrasal verbs, it would be “break down” in verb form, with “breakdown” or “break-down” being the corresponding noun (or adjective). Just like “log in”, “check out”, “back up”, etc. Or “signups”, which was used correctly. Also, there should not be a line break before “cancellations” in the block-quoted text.
Re: Netflix is a decent value for 1 month per year
If they want $15.50 a month from me, I’ll wait till they have a month’s worth of stuff worth bothering with. At the rate they’re going, that’ll happen once a year.
The endless stream of petty BS and the discovery that one of the few shows I watched was dropped makes Netflix increasingly dispensible.
This comment has been flagged by the community. Click here to show it.
So it sounds like it really did drive new subscribers?
Look, I really don’t have a dog in this fight, I think netflix is fine (even good) in some ways and horrible in others, my primary concern is that they don’t start trying to charge me for the 4 or 5 smart TVs I have setup in one house over two wifis (haven’t run into an issue so far).
But it really sounds like the most likely explanation is the password crackdown worked, and you’re desperate to say there might be other explanations. Which sure, maybe? But probably not. AFAIK netflix hasn’t had a particularly spectacular hit lately. (think GOT or Witcher season 1)
So OK, looks like their password gambit worked (I’m surprised too, actually). You’d have much more credibility if you just accepted that rather than wish-explaining it away.
It certainly was.
At smashing their numbers into smaller numbers, that is.
Sigh… They are a consistently good service and there’s always something interesting for me to watch here, but once you’re trying to force people to pay for what used to be “extra” facilities like streaming on multiple devices and such, it’s hard to defend that.
I’m not on the “cancel” stage yet – they provided entertainment for me flawlessly while travelling between multiple countries recently. But, they’re coming close to reducing the value they add, and I suspect their tactics are going to get worse after the fallout of the strikes, which might inspire me to support indie platforms instead for the first time since they led the way.
I suspect this will end up in another unfortunate less in what happens when you let the lawyers and bean counters take over from the people who understand their audience, but let’s hope…
2 things
I’ve been with Netflix since the pay per disc days. And I remember something about this from back then that works today.
Burner email and prepaid debit cards.
Add to that pay to rent “addresses” such as personal mail box and c/o services…
People are exploiting free signup.
And can do so nearly indefinitely.
The sign of positive use is retention, not growth
Misuse of "Competition" again....
Except that it’s actually content fragmentation that’s happening (which is another part of the general dipshittery that was mentioned), not competition.
the investors saw thru the hype
The stock tanked because growth has definitely stalled and Netflix has no more tactics to try. Their content has been sliding downhill for years, maybe a sign of scattering budget too widely. I gave up and cancelled. Nothing to watch.
Re:
You’re a rarity. Many are quite content with the content. In fact, they are bringing in new viewers with production and distribution agreements in other country’s industries.
They’re also bringing in new old material through licensing. The big thing that kept the DVD service alive so long was the independent material not streaming elsewhere. Many disc titles are now moving onto Netflix streaming.
Combined with material from Korea and India, they are adding Japanese and west Asian content now as well.
Netflix has a very strong retention rate: far higher than most other services. Something CIRP points out as a problem for Amazon. As Netflix is now testing long term agreements with foreign distribution. Long a key aspect of Prime Video.
I still think the only way for Netflix to expand is to partner with another platform. Prime being the most ideal and likely for all involved.
But lost customers is not a real concern… for now.
why are so many people upset that they can't share pwds?
It’s one thing to share you password with your college student in another state. It’s another to share it with your ex-roommate, boyfriend, aunt, brother, and penpal across the country. Why should you be allowed to do that?
Re:
The general idea is because they used to allow sharing they should be mandated to do so forever.
Any deviance is evil monopoly stuff. Etc.
Re: Re:
Trust you to have the bad take….
The actual argument is that because you pay for X devices, then you should be able to use X devices even if those people aren’t in the same household. Which fits with the way things used to work where if, say, one member of the household was working abroad while the kids were at a sleepover, it wouldn’t be a problem if the remaining partner also watched from a different location.
Now, all of that is threatened because the CEO of Netflix used to say that it wasn’t a problem if people who did’t live together share.
Of course it’s a problem when you say “I’m going to charge full price for what I said you could do for free”, but the thing to remember is that there’s a lot of edge cases that don’t involve people trying to give a free ride to people outside their household. A lot of people chose Netflix because, for example, the would just get their local selection when travelling instead of being told they can’t use the service until they get home. Remove that option, and you remove a reason to pay to begin with.
Re: Re: Re:
You appear to have the bad take, or had/know someone who had a bad experience and didn’t call to fix it.
A) Netflix is not stopping a 4 screen family from using 4 screens, even in different locations. A simple phone call gets the second location cleared.
B) you can use your us account internationally. I’ve done so. Even on foreign wifi or hard line. Even on a foreign device on a foreign connection.
C) you can share your family plan with a non-stateside family member.
I have my own us account. But also occasionally use the foreign accounts of friends over seas. We pay the extra screen rate. Never had an issue that a call couldn’t fix.
Maybe you just read the omg posts of ignorant people or the lies of news companies. Maybe, perhaps, you got a cranky customer service member.
No, it’s not as easy as it used to be. But it’s not more than a tiny bit of effort and patience by the account holder either.
Re:
Because they said you could. Also, why should you not be able to share with your girl/boyfriend if they’re not permanently in a different place? I fear a lot of this is based around the idea that people don’t travel, in which case why should those who do be punished when allowing different content based on where you are located is part of their original selling point?
Re: Re:
In the past.
If you believe what a company say today works tomorrow…
Your 10 or an idiot
I can plaster a response with hundreds of thousand of pages of current software that was once life time purchase and is now —not.
Those that reach that epoch?
Fall into three camps.
Freeloaders
Reluctant upgrades
Supportive fans