Netflix has surpassed analysts’ predictions for subscriber growth thanks to a combination of factors, including a crackdown on password sharing and the introduction of a cheaper, ad-supported tier. In Q1, the company added 9.33 million subscribers worldwide, double what was expected.
The success of Netflix’s approach to monetizing freeloaders suggests that password sharing is a widespread issue among users. The company’s ad-supported tier, priced at $6.99 per month, has seen significant growth in recent quarters, with over 40% of new signups opting for this option.
Disney and Warner Bros. Discovery are set to follow suit with their own password-sharing limitations, with Disney+ expected to make changes this summer and Warner Bros. Discovery planning to take action later this year. Netflix’s approach is setting a precedent for its competitors to follow.
Macquarie estimates that there are around 100 million users who share passwords, indicating a significant market potential for converting these shared accounts into paid subscriptions. While competitors may use Netflix’s crackdown as a roadmap to follow, the company remains ahead of the curve in terms of subscriber growth and strategy.
Disclosure: Mathias Döpfner, CEO of Axel Springer, Business Insider’s parent company, is a board member at Netflix.
