Netflix’s Password Crackdown Deemed ‘Successful,’ Study Shows

Netflix's password-sharing crackdown gave its intended effect.

A recent report from research firm Antenna found that Netflix gained more subscribers than people thought once it started cracking down on password sharing worldwide.

Netflix started charging people for sharing their passwords in late May to offset its losses due to its decreasing amount of subscribers.

Why Netflix Succeded

Netflix was always known for its lenient account-sharing policies back in its heyday. A 2016 report from Tech Crunch stated that then-Netflix CEO Reed Hastings said that Netflix subscribers can share their accounts with others, calling it a "positive thing."

However, the video-streaming market in 2016 was much different compared to now. With numerous competitors taking more and more of the pie Netflix previously enjoyed, it had to be generous; it started charging people for password sharing on May 23 to offset its losses.

Many Netflix subscribers weren't pleased, leading to many thinking that Netflix is hammering another nail to its proverbial coffin. However, the opposite happened - Netflix grew more than what was expected of it.

According to Antenna's report, Netflix saw a record-breaking gross addition in June, by as much as 128.9%. This increase means that more people subscribed to Netflix's services probably because of its password-sharing crackdown.

This gross addition is evidenced by the sudden increase in late May when Netflix saw 73,000 daily signups - a 102% increase compared to its 60-day average. Thanks to this sudden increase, Netflix saw 100,000 new subscribers between May 26 and May 27.

Although the company saw a 25.7% drop in gross additions as fewer people subscribed to Netflix to comply with its new password-sharing policy, the company still grew. In fact, Antenna said that the drop wasn't enough to offset the number of signups Netflix enjoyed in June; Netflix commanded 2.6 million Gross Additions come July 2023, with Antenna describing it as "overall elevated compared to normal."

Additionally, some 23% of the signups that occurred in July went to its ad-supported plan, meaning that there are some Netflix subscribers who don't mind watching ads on the platform occasionally. Netflix famously resisted adding advertisements on its platform until it said it would in Oct. 2022, per Netflix's announcement.

A Source Of Inspiration

Because of Netflix's success in getting more revenue from charging password-sharing subscribers, other streaming services are looking to emulate it for themselves. According to a Business Insider report, Disney CEO Bob Iger wants to do the same to its Disney+ streaming service to offset the effects of the losses it recently experienced.

You may recall that Disney has been purging some of its content off its streaming service due to the costs connected to keeping them on its streaming service. The media giant decided to remove 26 shows from Disney+ and Hulu on May 19 to lower company expenditure.

Among these shows include "Willow" and "Bigshot" from its Disney+ streaming platform and "Y: The Last Man" and "Dollface" from Hulu.