Netflix's actions to counter the sharing of accounts have resulted in an increase of about 6 million subscribers

Netflix's move to impose an additional fee on users who share their account passwords with others has yielded results, as its subscriber count surpassed 238 million, an increase of 5.89 million in the second quarter. This unexpected jump signifies a significant boost for the streaming platform.

Despite facing the repercussions of major strikes by actors and screenwriters in the United States, Netflix has managed to achieve net profits of $1.5 billion between April and June, according to a statement released on Wednesday.

Since May of last year, Netflix has required its users in over 100 countries, including the United States, to pay an additional fee if they choose to share their account passwords with individuals who do not reside at the same location. Previously, many users were sharing passwords without any charge.

The company stated in its Wednesday statement that "revenues in all regions (of the world) have increased compared to before this change" and that "subscriptions are now outpacing cancellations."

It is expected that the platform will promptly expand its policy regarding shared paid accounts to include all countries where its service is available.

Netflix is striving to improve its position after facing difficulties in 2022, with the goal of generating more revenue from each user.

In this context, the service stopped working on Wednesday in the United States and the United Kingdom for its cheapest subscription plan, which does not include advertisements.

A message was sent to users stating, "If you are currently subscribed to the Basic plan, you can keep it until you change your plan or cancel your subscription."

Viewers in these countries, as well as in Canada, have the option to choose between an ad-supported plan priced at $7 per month in the United States and two ad-free subscription plans at higher prices ($15.5 and $20).

They are required to pay an additional $8 per month to enable someone else to use their account.

Russell Benes, an analyst at Insider Intelligence, expects that "Netflix will increase pressure on password sharing and advertising revenue growth."

He explained that this direction "is not a coincidence. Given the stagnant user base in an increasing number of countries, the company seeks to encourage 'freeloading' users to adopt the ad-supported option."

This research firm estimated that Netflix's advertising revenue in the United States will reach around $770 million this year and over $1 billion in 2024.

Netflix reported that the number of subscribers to its ad-supported plan, which was launched in November, reached approximately 5 million monthly active users worldwide as of mid-May, which is different from the overall subscriber count.

The co-CEO Greg Peters stated on that occasion, "Since the beginning of the year, the number of subscribers to our ad-supported offering has more than doubled." He added, "More than a quarter of new subscribers are choosing this plan in countries where it is available."

The company further stated in its Wednesday statement, "Building an advertising business from scratch is not easy, and there is still much work ahead of us, but we believe the scale of this activity will reach billions of dollars over time."

In the second quarter, Netflix recorded revenues of $8.2 billion, slightly lower than analysts' expectations.

Its stock value dropped over 8% in after-hours trading following the closure of the New York Stock Exchange.

Louis Navellier, the chief investment officer at Navellier & Associates, explained that analysts "are concerned that the platform may find itself lacking content due to the Hollywood strike."

However, he stated to Agence France-Presse, "What matters to Netflix is increasing the number of subscribers, and the password sharing move has paid off."

The strike conducted by actors and screenwriters in the United States has led to the worst paralysis in this sector in over 60 years.

Hundreds of them demonstrated on Friday in front of Netflix's headquarters in Hollywood, Los Angeles, as well as at other locations, studios, and streaming platforms, including HBO, Amazon, and Paramount.

Actors and screenwriters are demanding improved salaries, which have become very low in the streaming era.

They also seek guarantees to prevent the use of artificial intelligence programs for writing scripts for their works or reproducing their voices and images.

Co-CEO Ted Sarandos stated during an analysts' conference on Wednesday, "We were hopeful of reaching an agreement at this stage."

In April, he confirmed that if the strike were to occur, Netflix would have enough "films and shows from all around the world (to continue for a long time)."

 

 

 

 

 

 

 

AFP