Blocking account sharing, a winning bet for Netflix (for now)

2023-06-10 15:47:00

The end of account sharing is paying off for Netflix. According to Antenna data, quoted by the Wall Street Journalthe SVOD service recorded a peak in registration in the four days following the blocking of account sharing in the United States at the end of May.

With 73,000 new US users on average per day, the company doubled its usual average, peaking at 100,000 new subscribers between May 26 and May 27. This performance even exceeds the influx of 2020, when consumers had subscribed en masse following the announcements of containment.

Sharing passwords on Netflix is ​​over!

Blocked people end up paying

Netflix had been preparing to block account sharing for almost a year, and its implementation was meteoric. Concretely, users who connect to the account from a network other than that of the home find themselves blocked. The company then offers “profiteers” to pay 5.99 euros to continue to access the account, for the benefit of two people outside the household.

This unpopular measure has its share of risks, since account sharing was also a way for some users to split the bill. Its shutdown therefore risked leading to account closures in an ultra-competitive ecosystem (Amazon Prime, Disney+, Peacock, HBO Max, etc.), as Netflix itself had acknowledged to its investors. But Antenna notes that account closures are currently largely exceeded by new subscriptions.

A bet to be confirmed in the long term

However, it is still too early to confirm that Netflix’s bet will be a winner in the long term, even if it has already worked in the short term in Canada and therefore in the United States. 100 million households worldwide, including 5 million in France, took advantage of the account of family members or friends for free, a practice that Netflix knew and tolerated until now.

The company needs to confirm this surge in subscribers in order to regain stability. And for good reason: it suffered a growth crisis in early 2022, marked by the first dead loss of subscribers in its history. This jolt was heavily sanctioned by the markets, and Netflix’s share price collapsed by more than 60% in six months to the end of June 2022, before recovering at the end of the year. Between the emergence of powerful and diverse competition and the arrival of a ceiling of subscribers in the United States, the platform needed to find new sources of growth.

It therefore resumed the tests of its strategy of restricting account sharing, in Latin America and Canada. These tests validated the initiative, which has therefore been extended to Netflix’s main markets, with success… for now.