According to the peanut gallery on Twitter, Netflix‘s decision to crack down on password sharing is a greedy miscalculation. But recent data suggests that the controversial move might actually be a brilliant idea.
Netflix officially initiated its new policy in the U.S. on May 23. Antenna, a television analytics company, tracked the streamer’s signups and cancellations in the days following that announcement. The results are conclusive and clear: After eliminating password sharing, Netflix effectively doubled its daily signups while also improving its ratio of signups to cancellations.
The big change was announced through an email that went out to Netflix subscribers who shared their accounts with people outside their respective households. “A Netflix account is for use by one household,” reads a blog post shared on the 23rd. “Everyone living in that household can use Netflix wherever they are — at home, on the go, on holiday — and take advantage of new features like Transfer Profile and Manage Access and Devices.”
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Netflix’s crackdown came as no surprise. The new policy was tested in regions like Latin America before being brought Stateside. As Netflix prepared to nix a beloved feature, it braced for the worst. Earlier this year, the streamer’s Co-CEO Greg Peters admitted that the password crackdown would not be “universally popular.”
The response on Twitter suggests that Peters’ comment was a bit of an understatement. Some affected users have responded to the crackdown with verbal abuse, while others hinted that they will find a “totally legal way” to watch Netflix. The most common refrain came from users who pledged to cancel their subscriptions rather than follow the new rules.
@netflix thanks for a solid 8 years but this password sharing policy was the final straw. I paid for multiple screens to decide how I wanted to use them. I hope that you see subscriptions go down instead of up and that other streaming services realize that this is not the way. pic.twitter.com/heWvbfYp1C
— AStaxx (@AStaxx__) June 7, 2023
Those complaints haven’t translated into a dent in Netflix’s subscriber numbers — at least not yet. According to Antenna, Netflix received nearly 100,000 signups on both May 26 and May 27. That surge was even greater than the one Netflix experienced during the early days of the COVID-19 pandemic.
In the four days after Netflix brought its crackdown to the United States, it averaged 73,000 new signups, which was about twice as many as its previous 60-day average. Some users did follow through on their cancellation plans, but that group paled in comparison to the rule-followers. Per Antenna, Netflix’s ratio of signups to cancellations rose by 25% over the equivalent pre-crackdown figure.
Though Netflix is now claiming that its subscriptions are “for use by one household” each, it is possible to maintain multiple profiles without breaking the new rules. Account owners can add additional users by paying $7.99 a month per profile. Users who live at the same address as the account owner can be added for free.
That fee becomes a lot less appealing when compared to the price of a new Netflix subscription. The platform’s ad-supported tier, which launched last year, costs $6.99 per month.
Perhaps the flexibility offered to Netflix customers blunted the impact of the streamer’s maligned change. Whatever the reason, Netflix is flying high. Its share price is up about 18% since it announced the arrival of its crackdown.
