Netflix confirmed that it is planning a “broad rollout” of its efforts to crack down on password-sharing during the second quarter of this year including the implementation of paid sharing in the United States.
The announcement was made during the firm’s earnings presentation covering the first quarter of 2023, a period during which Netflix added 1.75 million new paid users to its platform – a figure that missed analysts’ consensus estimate for the quarter by around 450,000.
The company said that it is “pleased” with the performance of its paid sharing program, which is currently fully implemented in several countries in Latin America including Chile, Costa Rica, and Peru. In addition, the program was later expanded to New Zealand, Canada, Portugal, and Spain.
Currently, paid sharing involves buying an extra account for those who use the account but are not living in the registered primary location. In Canada, the cost of each additional member stands at CAD$7.99 (USD$ 5.94) while in Portugal and Spain, the price per member stands at EUR 3.99 (USD$ 4.36) and EUR 5.99 (USD $6.54) respectively.
If a user decides to open a separate account, Netflix has developed a tool that lets them transfer their profile to that new register so they get to keep their personalized recommendations, viewing history and preferences.
Paid-Sharing Went Well in Canada and Netflix Expects to See the Same in The US
Netflix (NFLX) said that it expects to see its membership figures take a hit during the third quarter of this year as paid sharing is expanded to other latitudes including the US. However, it believes that the measure will ultimately yield a “better outcome” for both the company and its users.
Both the US and Canada (UCAN) is the most important region for the Los Gatos-based video streaming platform as it is responsible for generating nearly half of its revenues. Meanwhile, in terms of users, it represented almost a third of the firm’s total paid memberships by the end of 2022.
The streaming giant believes that the results of rolling out paid sharing in Canada can be used to predict what will happen when the measure is enforced in the United States. According to Netflix, its membership base in the North American country is now larger than it was before the crackdown while revenue growth in the country is accelerating beyond the rates seen in the US.
Nonetheless, the firm co-headed by Greg Peters and Ted Sarandos acknowledged that both engagement and paid memberships will take a hit during the third quarter of the year as there has been a wave of cancelations right after the program is enforced.
The company’s experiment with this first group of countries indicates that it is only a matter of time before many of those users either open a new account or pay for an additional membership.
Netflix Cuts the Price of Subscriptions in 116 Countries in Q1 2023
To keep growing at a global scale, Netflix cut the price of subscriptions in a total of 116 countries during the first quarter of 2023. The company confirmed that these cuts only affect regions that account for around 5% of its revenue but said that the measure could lead to increased adoption and growth over time.
Meanwhile, the company said that the recently launched ad-supported tier is performing very well in terms of “per-member advertising economics”. For example, in the US, the firm highlighted that the per-member revenues from ad-supported accounts are exceeding the price of the standard account already when adding both ad and subscription revenue.
Netflix has also been introducing some upgrades to the ad-supported tier such as better video quality of 1080p and the possibility of streaming on two devices at the same time. These two enhancements are available only in Canada and Spain for now but will soon be implemented in other locations as well as paid sharing keeps being enforced.
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