Netflix Password Crackdown Boosts New Subscribers to Highest Level Since Covid Began

Netflix’s crackdown on password sharing in the United States is yielding positive results, as early data suggests a significant increase in new subscriber sign-ups compared to the early days of the Covid pandemic.

According to streaming analytics company Antenna, late May marked Netflix’s “four single largest days” of new user sign-ups in over four years of measurement.

Since the crackdown, Netflix has added 100,000 new accounts on both May 26 and May 27, with subsequent days seeing over a 100% increase in sign-ups compared to the previous 60-day average.

Antenna’s report highlights that these spikes exceed the ones observed during the initial Covid-19 lockdowns in 2020.

Although there has been an increase in cancellations during this period, it is not as significant as the rise in sign-ups.

As a result of this positive news, Netflix shares experienced a nearly 2% rise in early trading. The company’s stock has climbed more than 27% to approximately $415 over the past month. Previously, Netflix tolerated password sharing as it fueled growth, but with heavy subscriber losses in 2020, the company acknowledged the negative impact on revenue and content investment.

To address this issue, Netflix informed US subscribers last month that sharing passwords with individuals outside their household would require an additional $7.99 monthly fee or the creation of a new account.

The company also plans to block unauthorized password users. Netflix initiated password sharing restrictions earlier this year in various countries, including Canada, New Zealand, Portugal, and Spain.

In its recent earnings call, Netflix noted a net increase of 1.75 million global streaming subscribers in the first quarter, a growth of nearly 5% compared to the same period last year but falling short of the over 3 million anticipated by Wall Street analysts.

The company observed a “cancel reaction” in each market when announcing the paid sharing option but ultimately saw increased acquisition and revenue.