TL;DR
- After the Netflix password-sharing crackdown, the company has seen significant subscriber growth.
- Theoretically, a significant portion of people who lost access to Netflix signed up for a new account.
- This will likely set a precedent for other streaming services to follow.
In the good ol’ days of 2017, the official Netflix Twitter account shared a simple tweet: “Love is sharing a password.” Oh, how times have changed. Back then, Netflix was fine with people sharing passwords with others so multiple people could avoid paying for the service but still enjoy the content.
This year, that all changed. In an effort to boost subscriber growth, the Netflix password-sharing crackdown began. Now, there are numerous limitations to how you use your Netflix account outside of your home. With the dust settling, we now have evidence that the plan worked: subscriber growth skyrocketed right after Netflix instituted the new policy (via The Wall Street Journal).
Between the days of May 25 and May 28 — shortly after Netflix started notifying users in the United States of the new password-sharing limitations — Netflix saw more new subscribers than in any other four-day period since Antenna, an analytics company in the subscription market, started tracking the data in 2019.
In the chart below, you can see that the number of new subscribers in the US skyrocketed past the time period in which the WHO declared the COVID-19 pandemic.
In addition to this jump in subscribers, shares of Netflix went up by about 13% since May 23.
Netflix password sharing crackdown means more on the way
There’s only one conclusion to draw here: Netflix cracked down on the sharing of passwords and was rewarded with a huge jump in subscribers and a two-digit stock increase. That can only mean that we’re going to see similar policies come from other subscription services.
There’s no doubt that other music, video, and gaming subscription services have the same problem with password sharing that Netflix has. Those companies were likely waiting in the wings to see how this would go for Netflix. Would users really revolt like they said they would and cancel their Netflix subscription? Would the negative backlash tank the stock? Now that those companies know the answer is “no” to both of those questions, they can move forward with their own plans, secure in the knowledge that they likely will get the same results.
In other words, get ready for password crackdowns from all your other services.
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