Netflix Claims Its Password Sharing Crackdown Was A Smashing Success, But…
We noted how as Netflix growth has stalled internationally, the company has turned to nickel-and-diming its existing customers in order to give Wall Street its beloved quarterly returns at any cost. That has included not only last year's price hikes, but this week's decision to eliminate the company's cheapest ad-free tier in both the US and UK.
Then there's the company's password sharing crackdown. For more than a decade Netflix encouraged password sharing to boost growth. Now that growth is slowing and the company is facing greater competition, it has chosen to nag account owners into paying $8 extra per moocher. It's effectively double dipping, since Netflix already raises rates and charges users more for simultaneous streams.
Plenty of users complained about Netflix's about face on password sharing. And some early surveys suggested that it was possible that Netflix might lose more subscribers than it gained. But in a letter to investors regarding the company's Q2 '23 earnings, the company claims the entire gambit was a smashing success (though I'm not sure they'd be entirely honest if it wasn't):
Revenue in each region is now higher than pre-launch, with sign-ups already exceeding
cancellations."
That single sentence resulted in a lot of headlines like the BBC's Netflix Password Crackdown Fuels Subscriber Surge" or the Wall Street Journal's Netflix Password-Sharing Crackdown Delivers Jolt of New Subscriber Growth."
But while Netflix does breakdown subscriber totals in earnings (it saw 1.17 million new members from April to June in the U.S. and Canada, and almost 6 million worldwide), it isn't required to really detail the how and why of those signups. So it's possible this revenue boost could be due to a popular new show or organic growth, and not necessarily due to Netflix's scolding of password sharing accounts.
If you look at global Netflix subscriber growth, it's about where you'd expect it to be, password sharing or not. Not as solid as Q4 2022, but not as bad as Q1 2023. But again, compare subscriber additions to what Netflix was enjoying just a few years ago, and you can clearly see why Netflix is worried about Wall Street perceptions and looking for ways to squeeze more from existing users:
Netflix saw its net income jump to $1.49 billion from the previous' quarter's $1.44 billion (they should probably pay their creatives), but again it's not actually possible to determine if that had anything to do with the password sharing crackdown or is just ordinary growth.
Most folks still see Netflix as a decent value, especially when compared to traditional, bloated cable TV bundles. But that doesn't mean it's a great idea for Netflix to push its luck, especially given the surge in streaming competitors like Hulu, Amazon, Apple, Disney, and everyone else. Not to mention the growing public animosity toward the general dipshittery going on among executives in the streaming sector.
Making your product steadily more expensive with greater restrictions and lower overall quality may please Wall Street bean counters on the short term (see: Cory Doctorow's enshittification), but over the longer term it inevitably frustrates your customer base, tarnishes your brand, and gives your competitors a path toward eroding your market share simply by being slightly less annoying. You can shovel the tallies around from quarter to quarter to put on a good show, but eventually the check comes due.