Did You Have To Become a New Netflix Subscriber? How the Company Is Now Raking In the Cash

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As streaming competition builds and financial pressures intensify, in May, Netflix rolled out strict restrictions on password sharing in the U.S. and other countries. It was a bold move that had many wondering how the change would impact Netflix as the go-to streaming service for TV and films, and what it would mean for the rest of the subscription-based content streaming industry. 

Let’s find out what experts think — along with why this move has, weirdly, worked in Netflix’s favor and what it could mean for other streaming service providers down the road. 

Netflix Is Addressing a Long-Term Problem — And It’s Working  

All streaming services have been dealing with the problem of password sharing, basically since their infancy, and Netflix is no exception, but this is its first real attempt to resolve the issue.  

“Historically, [Netflix] refused to deal with the problem, and at times, it actively encouraged password sharing, arguing that sharing passwords actually enabled user growth,” said Dan Goman, tech streaming expert and founder and CEO of Ateliere.

Interestingly, rather than scaring away prospective subscribers with its strict no password sharing policy, Netflix saw a boom in user growth. 

“Antenna reported that immediately after the rollout, Netflix had the ‘four single largest days of U.S. user acquisition in the four and a half years that Antenna has been measuring the streaming service’,” Goman said. “On May 26 and 27, Netflix had almost 100,000 daily new sign-ups, and little to no consumer backlash.”

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Stefan Lederer, the CEO and founder of Bitmovin, a startup that provides video streaming infrastructure, added that “the spike in signups shows that enough consumers were prepared to swipe their card and sign up, demonstrating the perceived strength of Netflix’s brand and content.”

More Subscribers Are Opting for Netflix’s Ad-Supported Plan 

Though subscribers are signing up for Netflix in droves, it’s worth noting that they’re still looking to save money by opting into the service’s ad-supported plan. 

“Almost a quarter of the new [sign-ups] were for its ad-supported plan, which was the highest portion of signups,” Lederer said. “Therefore, it would seem that the slightly cheaper, ad-supported plan has helped make Netflix more accessible and appealing for viewers who were password-sharing by offering a more cost-effective option.”

Why Aren’t Other Streaming Services Doing This? 

Netflix’s new password-sharing crackdown has driven strong subscriber growth. So why aren’t other streaming services doing the same? The answer points, in part, to their comparative newness in the spacing. 

“Other competitors are not as mature and are not in a position to risk a subscriber backlash as they attempt to grow their services,” Goman said. 

In other words, other streaming giants and aspiring giants are still trying to generate enough traction to pull off such severe crackdowns without negative repercussions. 

“Secondary streaming services like Paramount+ or Disney+ may not be cracking down on password sharing….yet,” said Brian Chevalier-Jordan, CMO at National Business Capital. “They’re attempting to grow the eyeballs on their channels to maximize future advertising revenues.”  

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But that consumers are still willing to pay for Netflix after years of essentially stealing from it could point to weaknesses among other content providers, as it suggests that Netflix is the world’s most valued subscription service.  

“If people view their primary viewing platform as Netflix and other services as rounding out gaps in their programming, Netflix could easily remain the king of streaming,” Chevalier-Jordan said. “As other streaming services raise their prices (see Disney+ and Amazon Prime), this could exacerbate that impact.” 

It’s Only a Matter of Time Before Other Streaming Companies Crackdown on Password Sharing 

It’s likely only a matter of time before other streaming giants embrace the same severe policy of no password sharing that Netflix has rolled out. 

“They’re likely going to jump on Netflix’s bandwagon in the coming years,” Chevalier-Jordan said. “Given how compliant consumers have been, they’ll want to follow Netflix’s example. The degree to which consumers comply will reveal the strength of those brands and the content it provides.”

Netflix Has Ample International Content — And That Helps Amid the Strikes

Another factor playing in the dominance of Netflix right now is its ample international content, which helps it stay mighty amid the stateside strikes. Shows like “Squid Game” and “Money Heist” have been massive international hits that have Americans hooked.

“Netflix’s large, growing and popular international content remains unaffected by the U.S-based strikes and will provide it with new content to feed hungry viewers, further cementing Netflix in consumers’ minds as the go-to streaming service,” Chevalier-Jordan said. 

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What Is the Future of Streaming?  

In Goman’s opinion, the future of streaming mirrors the traditional cable model. This could ultimately be more expensive than the cable model.  

“I like to think of it as ‘Cable 2.0’,” Goman said. “Streaming services, including Netflix, will continue to increase the unsustainably low subscription prices, and we’re already at a point where subscriptions to the top streaming services cost more than the average cable bill. This leads us to Cable 2.0, where platforms like YouTube and Roku will bundle content and be the next ‘cable companies’ offering cost effective content bundles for consumers.”

We’re already seeing rising prices occurring in the streaming and subscription-based space. This could cause consumers to have to choose their streaming darlings more carefully. 

“The overall cost of paid streaming service subscriptions is rising dramatically as nearly all of the major streaming services have increased prices over the past 18 months — some dramatically,” said Ian Morris, CEO of Likewise, the Bill Gates-backed media and entertainment platform providing personalized content recommendations and discovery for TV, movies and more. “For example, Disney has more than doubled the price of Disney+ since its launch to $13.99/month, while also bumping Hulu to $17.99. With Max and Netflix above $15 each, and newer players such as Peacock and Paramount+ both north of $11/month, it is clear that most consumers will need to make some tough choices about what services they wish to keep.”

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