Netflix is Getting Richer Because it is Fierce About Users Sharing Passwords
Morrissey Technology – Netflix’s strict rules preventing password sharing are indeed unpleasant for users. But for the streaming giant, this risky move made him rich. In the first three months of 2024, Netflix added 9.3 million new subscribers, bringing its total subscriber base to nearly 270 million.
And with an increasing customer base and increasing subscription prices, this has given the company a quarterly profit of more than USD 2.3 billion (Rp. 37 trillion) up from USD 1.3 billion (Rp. 21 trillion) in 2023. Despite the price increase, Netflix revealed that year-on-year subscriber growth was the highest in the last 12 months. In the first three months of this year, customer growth rose to 16% compared to last year’s figure of 4.9%.
Prevent Password Sharing
Much of this growth is likely due to Netflix’s recent crackdown on preventing users from sharing passwords. For your information, many Netflix users enjoy the service using other people’s accounts. After investors were shocked by Netflix’s reported net loss in 2020, the company implemented a paid share system. Instead of sharing accounts with friends, home users now have to pay a fee to allow other people to use their accounts.
By looking at the IP address and location of the device, Netflix checks whether the user is part of the household paying for the account. If the service detects what it believes to be password sharing, the device will be blocked and the user will be given the option to create their own account. Initially, as quoted by the Daily Mail, Netflix’s firm steps were considered a gamble by some people because customers might not be happy and run away. However, this decision seems to have yielded sweet results for Netflix FOR4D.
At the end of last year, Netflix added 13 million new subscribers, bringing the total to 260.28 million. However, Netflix actually attributes its success to the increase in quality drama content that attracts audience interest. Netflix said its biggest successes include Society of the Snow with 98.5 million views, Fool Me Once with 98.2 million views, and Griselda with 66.4 million views. Currently, Netflix maintains its top position as the most popular streaming service in the world, ahead of Amazon Prime Video which has 220 million subscribers globally.
This growth occurred because Netflix has made several changes in determining its subscription prices. In Indonesia, Netflix subscription prices currently start from IDR 65 thousand per month for the Basic package, IDR 120 thousand per month for the Standard package, and IDR 186 thousand per month for the Premium package.
Investors Are Worried
Apparently this will be the last time Netflix provides information about the growth of its subscriber numbers. Netflix announced it will stop reporting subscriber numbers starting in the first quarter of 2025.
“In our early days, when we had little revenue or profits, membership growth was a strong indicator of our future potential. But now we are generating enormous profits and free cash flow,” Netflix said.
As an explanation for the decision, they also mentioned new sources of income, which include the addition of paid sharing accounts and different subscription levels. This report also states that Netflix is enriching its content so that it becomes more varied, including expanding in areas such as games and sports. This decision, according to Netflix, has succeeded in attracting old customers and attracting new customers.
On the other hand, the announcement raised concerns among investors who saw it as a sign that subscriber growth might slow. Investors seem to be looking at the parent company of Facebook, Meta, and X/Twitter FOR4D. Both stopped reporting subscriber figures as their growth slowed.
“The decision to no longer disclose quarterly subscriber growth from next year will not go over well,” said technology and media analyst Paolo Pescatore of PP Foresight.
“The next quarter may be challenging due to seasonal factors that typically underperform compared to other regions as people spend more time outdoors,” he predicted.
Immediately following the announcement, Netflix’s share price fell nearly 5%. However, the share price is still up 30% since the start of the year, approaching its 2021 peak.