Netflix's Password Crackdown Gamble Pays Off: Co-CEO Says, 'Retention Is Quite Good In Essence'

Netflix Inc.’s (NASDAQ:NFLX) calculated crackdown on password-sharing proves to be a game-changer, resulting in a staggering influx of 5.9 million new subscribers worldwide. 

What Happened: According to Netflix’s second-quarter earnings report released on Wednesday, the company’s efforts to crack down on password-sharing yielded positive results. 

During this quarter, the streaming platform attracted 5.9 million new subscribers worldwide, with 1.17 million new members hailing from the U.S. and Canada between April and June.

See Also: Netflix Quietly Removes The Cheapest Ad-free Plan In The US

Initially slated for the first quarter, the crackdown was pushed back to the second quarter due to the sheer scale of the issue – more than 100 million people were found to be sharing their accounts with others outside their households. 

However, Netflix’s gamble paid off remarkably well as customers’ “retention is quite good in essence.”

“This latest move reflects what we think will best achieve those goals in the countries that we launched it in U.S., UK and Canada,” said Netflix co-CEO, Greg Peters, adding, “We are rolling this out in an iterative fashion across countries, and that allows us to understand the impacts and not be surprised.”

What Was Netflix’s Approach: Last year’s subscriber loss had Netflix taking swift action to regain its momentum. The two significant measures the company took were: introducing a more affordable ad-supported plan and addressing the prevalent password-sharing issue. 

In May this year, Netflix initiated its crackdown, targeting accounts in the U.S., U.K., and over 100 other countries. Under the new policy, users must now pay an additional $7.99 to share their passwords outside their households.

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