Netflix has surpassed analysts’ expectations by significantly boosting its revenue, profit, and number of paying subscribers. This success is largely attributed to the company’s recent crackdown on account sharing, commonly referred to as “paid sharing.”
The streaming giant initiated this policy in the United States, which resulted in an impressive addition of 5.8 million new paying subscribers. Encouraged by this outcome, Netflix plans to implement similar measures in almost all of its remaining markets.
A comprehensive 15-page report revealed that the crackdown had minimal impact on subscription cancellations. Users who were locked out of their friends’ accounts did not cancel their subscriptions at high rates, indicating the effectiveness of the company’s strategy.
In a related move, Netflix discontinued its Basic plan in the US, which was priced at $9.99. The plan was also available for £9.99 in the UK and €9.99 in the EU. Now, new and returning users have the option to choose from the $6.99 Standard with Ads, $15.49 Standard, or $19.99 Premium plans. The Basic plan remains available only to current users, who will lose access to it if they switch to another plan in the future.
Despite these changes, Netflix clarified that it is not currently relying on ads for revenue. While the company is developing its ad business, it is also collaborating with Nielsen and EDO to improve measurement and attract advertisers interested in investing in the new ad solution.
This strategic move by Netflix to curb account sharing and revise its subscription plans has proven successful, leading to a significant increase in paying subscribers and exceeding market expectations.