Netflix’s crackdown on password sharing will give an immediate lift to subscriptions, according to market analysts.
In Australia, Netflix sent an email to members who are sharing Netflix outside their household.
“A Netflix account is for use by one household,” subscribers were told.
“Everyone living in that household can use Netflix wherever they are – at home, on the go, on holiday – and take advantage of new features like Transfer Profile and Manage Access and Devices.
“We recognise that our members have many entertainment choices. It’s why we continue to invest heavily in a wide variety of new films and TV programmes – so whatever your taste, mood or language and whoever you’re watching with, there’s always something satisfying to watch on Netflix.”
Netflix booked $1.06 billion in revenue in Australia in the year to December 2022, according to documents lodged with corporate regulator ASIC.
Analysts at investment bank Jefferies believe subscription growth will be driven by password sharing changes.
“These changes will push non-payers into a new subscription tier vs. churning out or up-pricing,” the analyst write in a note to clients.
The potential is huge, about 100 million "borrowers" of passwords globally potentially becoming subscribers.
“Another benefit of the ad tier is we believe the turn-off-turn-on-ers (consumers focused on value) will become regular subscribers via the ad tier,” say the analysts.
Netflix’s advertising-supported model, just six months old, now has 5 million subscribers.
At the upfronts in the US, Netflx told media buyers that more than a quarter of new subscribers opt for the cheaper advertising-supported tier.
“The signals are promising: engagement on our ads plan is similar to our comparable non-ads plans,” says co-CEO Greg Peters.
“Since early this year, our ads member base has more than doubled. On average, more than a quarter of our signups now choose the ads plan in countries where it's available. Seventy percent of our ad-supported members are between the ages of 18 and 49.”
Peter Naylor, VP, global advertising sales, announced new product and measurement solutions for Netflix’s ad-supported plan, including the ability for brands “to connect with our audiences during some of the most watched and most relevant cultural moments of the year.”
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