Netflix Gains Subscribers After Password Crackdown
Streaming giant Netflix added 5.9M new subscribers in Q2, nearly three times as many as analysts had expected. The streaming giant secured these gains in tandem with a crackdown on password sharing among users.
Facts
- Streaming giant Netflix added 5.9M new subscribers in Q2, nearly three times as many as analysts had expected. The streaming giant secured these gains in tandem with a crackdown on password sharing among users.1
- Investors had expected only 1.8M subscribers. One investment analyst said that the password crackdown had "supercharged" the platform's user base.2
- The company said in a letter to shareholders, "We’re seeing healthy conversion of borrower households into full paying Netflix memberships as well as uptake of our extra member feature."3
- The price change helped Netflix boost its revenue by 3% for the period to $8.2B, falling below analyst expectations. The company earned $1.49B during Q2 compared with $1.44B last year — earnings per share reportedly came in at $3.29, exceeding the average analyst estimate of $2.85 per share.4
- Despite the positive growth figures, investors reacted negatively as Netflix's stock price fell 8% in Wednesday trading, which could be related to the Hollywood strike in part.5
- Meanwhile, Netflix's co-CEO Ted Sarandos declined to pinpoint how long Netflix can keep releasing new series and films if the strike continues past Labor Day. "The real point is we need to get this strike to a conclusion so we can continue to move forward," he said.6
Sources: 1Guardian, 2Business Plus, 3Variety, 4Boston Herald, 5Archive, and 6Associated Press.
Narratives
- Narrative A, as provided by BBC News. Despite warnings that Netflix's push to stop password sharing would result in mass cancellations, the company showed a bigger-than-expected growth for Q2. It added almost 6M paying subscribers, which is quite a remarkable turnaround.
- Narrative B, as provided by TechCrunch. Netflix's continuous effort to stop password sharing could potentially hurt its competitive edge in various markets. In India, for example, Netflix faces stiff competition from JioCinema, which streams numerous popular shows and movies from NBC, HBO, and Warner Bros. It has yet to be seen if the password-sharing crackdown will ultimately be bad for business.
