Netflix saw an uptick in customers buying subscriptions to their streaming service immediately after the company announced it would crack down on password sharing in the United States and other key territories, the analytics firm Antenna reported this week.
The data, which Antenna shared first with the Wall Street Journal, showed subscriptions ballooned in the period between May 25 and May 28, days after Netflix said it would boot freeloaders from the service.
Antenna said it examines billing data from various providers whose customers opt-in to share that information with them, and doesn’t count subscribers who watch Netflix on free plans or via certain bundles or distributors. The implication from that disclosure is that the rise in Netflix subscriptions reported from Antenna relate to customers who actually went to the Netflix website or app and outright paid for the service.
Netflix has not commented on the matter. It typically reserves disclosing subscriber gains or losses for the company’s quarterly earnings reports. Its U.S. and Canadian businesses have seen virtually no growth over the last few consecutive financial quarters; the company continues to see rapid adoption overseas, primarily in the Asia-Pacific region.
For years, Netflix turned a blind eye to customers who shared their usernames and passwords with out-of-home freeloaders, despite having a condition in their terms of service that forbade the practice. Some executives at the company said they were aware paying customers were sharing their accounts with others, and even suggested the practice was good for business.
Two things caused Netflix to change its mind over the last few years: Legacy media brands like Disney, Warner Bros Discovery (WBD) and Comcast have spun up their own streaming services, and stopped licensing their top television shows and movies to Netflix. At the same time, Netflix pumped tens of billions of dollars in producing original content to offset the loss of licensed TV shows and movies, but did not generate as many hits as they expected.
Executives have largely avoided addressing these issues, and instead say password-sharing between paying and non-paying customers is the biggest reason why the company isn’t generating the revenue that it once was. Last year, the company began cracking down on password sharing in Latin America as a test before their broader rollout; the number of customers who paid for a Netflix subscription dipped slightly as a result.
Netflix says it expected to see the same dip in customer accounts immediately after it began the same crackdown in the United States and other key territories. That could still be the case, because Antenna’s data only shows the number of people who started paying for a Netflix subscription in the days that followed the company’s announcement — it doesn’t show how many customers dropped their subscription, and the number of streamers leaving the platform could be higher than the number of customers joining.
Netflix last reported their financial earnings in mid-April, which means the company is expected to offer a fresh report on the health of their business in July or August. That report will cover the three-month period that ends June 30, and will offer insight into how many customers actually signed up or left following its decision to broaden its anti-freeloader campaign.