Netflix’s crackdown on password sharing has led to a surge in new sign-ups. The company’s upcoming price increases come at a time when many new users are opting for its more affordable ad-supported plan.
Netflix is planning price increases, even as many new users opt for its cheaper plan with adverts.
The streaming giant saw an increase of over 13.1 million subscriptions in the three months ending in December, marking the highest quarterly growth since 2020 and extending a growth streak initiated last year.
Netflix expressed confidence in its growth trajectory and announced plans to raise prices. Co-chief executive Greg Peters stated during a call with analysts that they had temporarily halted price increases while implementing paid sharing but were now returning to their standard approach, signaling a “back to business as usual” sentiment.
Despite initial resistance to incorporating advertisements due to concerns about viewer experience and business complications, many new members opted for Netflix’s cheapest plan, even with the inclusion of ads. In the 12 countries where advertisements are offered, constituting some of its major markets like the UK and US, the plan accounted for 40% of new sign-ups.
This uptake reflects a shift in Netflix’s strategy prompted by unexpected subscriber declines and profit reductions in the first half of 2022. To attract new viewers and increase revenue, the company has explored various avenues, including the introduction of advertisements and efforts to curb password sharing. Additionally, Netflix is experimenting with live events and recently announced a 10-year, $5 billion deal to stream WWE Raw.
Competitors like Amazon are also making similar moves, with plans to expand their live sports offerings and introduce advertisements to Prime members. Analysts like Paolo Pescatore view Netflix’s latest results as validation of its strategy, reaffirming its dominance in the streaming market.
While Netflix does not anticipate significant advertising-driven growth this year, the program has generated excitement on Wall Street due to its potential to increase revenue per account. Netflix has reported significant adoption of its ad-supported plan, with over 23 million accounts subscribing to it, up from 15 million in November.
Analysts were pleasantly surprised by the number of new subscribers Netflix added in the quarter, as there were concerns about sign-ups declining without the release of a standout hit.
Netflix attributed its success to a robust lineup of programs, featuring popular titles like the Beckham documentary series and Adam Sandler’s film, “Leo.”
The streaming platform received 18 Oscar nominations, including a nod for “Best Picture” for the film “Maestro,” starring Bradley Cooper and Carey Mulligan.
Following the announcement, shares surged more than 6% in after-hours trading.
In 2023, Netflix reported revenue exceeding $33.7 billion, marking a growth of over 6% compared to 2022.
Profits for the year totaled $5.4 billion, a notable increase from $4.49 billion the previous year.
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