Netflix password crackdown fuels Sign-up surge

Netflix password crackdown fuels Sign-up surge By Fathimath Nasli - January 24, 2024
Netflix password crackdown fuels Sign up surge

Netflix witnessed an increase of more than 13.1 million subscriptions

Netflix experienced a surge in new sign-ups towards the end of last year as customers, prompted by the company's efforts to curb password-sharing, opted to establish individual accounts.

In the last quarter of the year, the streaming giant, Netflix, witnessed an increase of more than 13.1 million subscriptions, marking the highest quarterly growth since 2020. The company expressed confidence in its growth trajectory and announced plans to implement price increases.

Co-chief executive Greg Peters mentioned that price hikes were temporarily halted during the rollout of paid sharing but are now set to resume as part of the standard approach, signifying a return to normal operations.

Despite the prospect of encountering advertisements, a significant number of new members opted for Netflix's most affordable plan.

In the 12 countries where Netflix offers advertising, constituting major markets such as the UK and US, the plan with ads accounted for 40% of the new sign-ups.

This development is notable for a company that had long resisted incorporating ads, citing concerns about the impact on viewer experience and potential complications with privacy risks and other issues.

However, the company faced a setback with an unexpected decline in subscribers in the first half of 2022, coupled with a drop in profits. This prompted Netflix to explore new avenues for attracting viewers and generating additional revenue.

In addition to incorporating advertisements and enforcing password-sharing restrictions, the company is testing the inclusion of more live events to expand its audience.

Recently, Netflix announced a 10-year, $5 billion deal to bring WWE Raw, the most popular weekly pro-wrestling show, to its platform. This strategic move aligns with similar initiatives by competitors in the streaming industry. For instance, Amazon is making efforts to enhance its offering of live sports events and is set to introduce ads to Prime members' viewing experiences, with an additional fee required to opt-out starting this month.

Analyst Paolo Pescatore from PP Foresight commented on the validation of Netflix's strategy, citing another successful quarter to conclude the year.

The latest results affirm Netflix's dominant position among all streaming services. In terms of subscription pricing, Netflix charges £4.99 in the UK and $6.99 per month in the US for the standard plan with ads, compared to £10.99 and $15.49 without ads.

Although Netflix does not anticipate a significant contribution to growth from advertising this year, the introduction of ads alongside subscriptions has generated enthusiasm on Wall Street due to its potential to increase revenue per account.

The company had previously suggested the growing success of this plan, claiming over 23 million accounts earlier this month compared to 15 million in November. The unexpectedly high number of new subscribers added in the quarter surprised analysts who were concerned about the impact of not having a standout hit.

Netflix highlighted a robust lineup of programs, including popular titles like the Beckham documentary series and Adam Sandler's "Leo." The platform received 18 Oscar nominations, including "Best Picture" for "Maestro," starring Bradley Cooper and Carey Mulligan.

Following these positive developments, shares surged more than 6% in after-hours trade.

For the entire year, Netflix reported revenue exceeding $33.7 billion in 2023, representing a growth of over 6% compared to 2022. Profits for the year reached $5.4 billion, an increase from $4.49 billion in the previous year.

Source: BBC

By Fathimath Nasli - January 24, 2024

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