Netflix password crackdown fuels sign-up surgeon January 23, 2024 at 11:39 pm

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The company is planning price increases, even as many new users opt for its cheaper plan with adverts.

a woman holds a remoteImage source, Getty Images

Netflix sign-ups boomed at the end of last year as customers prodded by the firm’s crackdown on password-sharing created their own accounts.

The streaming giant added more than 13.1 million subscriptions in the three months ended in December.

That was the most for any quarter since 2020, extending a streak of growth that started last year.

Netflix said it was confident in its growth path and was planning to raise prices.

“We largely put price increases on hold as we rolled out paid sharing. Now that we’re through that, we’re able to resume our standard approach,” co-chief executive Greg Peters said on a call with analysts to discuss its latest quarterly update.

“The summary statement might be, ‘back to business as usual’.”

Many of its new members opted for the company’s cheapest plan, undeterred by the prospect of seeing advertisements.

Netflix said in the 12 countries where it offers adverts – which include some of its biggest markets such as the UK and US – the plan accounted for 40% of the new sign-ups.

The gains are an ironic twist for a firm that resisted calls to sell ads for years, saying such a move would hurt the viewer experience and complicate its business with privacy risks and other issues.

But the company was jolted by an unexpected subscriber decline in the first half of 2022, followed by a fall in profits, which prompted it to seek out new ways to bring in new viewers – and more money.

As well as adverts and the password crackdown, it is experimenting with more live events to bring in new audiences.

On Tuesday, it announced a 10-year, $5bn (£3.9bn) deal to bring WWE Raw – pro-wrestling’s most popular weekly show – to the platform.

Many of its rivals are making similar moves.

Amazon, for example, is trying to boost its slate of live sports events. It is also due to start showing adverts to Prime members when they watch starting this month, unless they pay $2.99 extra per month.

Paolo Pescatore, an analyst at PP Foresight, said the numbers validated Netflix’s strategy.

“Another cracking quarter to finish the year,” he said. “These latest results reaffirm that Netflix is firmly the king among all streamers.”

Netflix charges £4.99 in the UK and $6.99 per month in the US for the standard plan with adverts, compared with £10.99 and $15.49 without.

It said it did not expect advertising to contribute meaningfully to growth this year.

But the programme has sparked excitement on Wall Street since selling ads, on top of subscriptions, has the potential to bolster the money a company can earn per account.

Netflix had already hinted that the plan was gaining traction, claiming earlier this month that it had more than 23 million accounts, compared with 15 million in November.

Still, the number of new subscribers it added in the quarter also surprised analysts, who had worried that sign-ups would suffer without the release of a stand-out hit.

Netflix said it had offered a strong slate of programmes, including hits like the Beckham documentary series and Adam Sandler’s Leo.

The platform received 18 Oscar nominations on Tuesday, including “Best Picture” for Maestro starring Bradley Cooper and Carey Mulligan.

Shares jumped more than 6% in after-hours trade.

For the year, Netflix reported more than $33.7bn in revenue in 2023, up more than 6% over 2022.

Profits were $5.4bn for the year, compared with $4.49bn the year before.

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