Netflix's Co-CEO Says 'Thrilled' With Password-Sharing Crackdown, Sees Positive Impact On Engagement

In a recent earnings call, Netflix Inc NFLX said it was “thrilled” with the results of its recent crackdown on password sharing, which has led to increased engagement and new user sign-ups.

What Happened: Netflix’s co-CEO, Ted Sarandos, revealed during the earnings call that the company is pleased with the impact of the new password-sharing rules on user engagement, reported Business Insider.

The company implemented the new rules last year, preventing users from sharing passwords with individuals outside their households. This move has led to a slight decrease in engagement due to paid sharing, but it has also driven new users to create their own accounts.

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“Our engagement is a bit impacted by our paid sharing. Think about it like fewer households using the same account,” Sarandos said. “So as those folks spin off and get their own accounts, and we win them over with our programming, that will normalize and continue to grow. We’re really pleased with our engagement.”

Netflix subscribers, on average, spend about two hours per day on the platform, with popular shows like “Stranger Things,” “Bridgerton,” and “Squid Game” attracting large audiences worldwide. These audiences are willing to pay the full subscription cost or the additional $7.99 charge to add new users to their existing accounts.

Why It Matters: The crackdown on password sharing has been a strategic move for Netflix. It has not only increased engagement but also led to a surge in new subscribers. This is evident from the company’s Q4 earnings, which showed a 12.5% year-over-year increase in revenue, beating the Street consensus estimate. This is a continuation of the positive trend that started in Q2 2023 when the company attracted 5.9 million new subscribers worldwide due to the password-sharing rules.

Netflix’s success with this strategy has also been a point of contention for its competitors. Amazon.com Inc‘s AMZN Prime Video, for example, mocked Netflix’s crackdown on password sharing, but the results speak for themselves.

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