A federal judge this week approved a request by Netflix to dismiss a shareholder’s lawsuit that accused the company of concealing the effects of password sharing on subscriber growth.
The lawsuit was filed in 2022 after Netflix reported a loss of 200,000 subscribers and forecast it could lose ten times more customers over a trend that involved paying customers sharing their account credentials with freeloaders who accessed Netflix’s catalog of TV shows and movies without paying for the privilege.
On Tuesday, the judge overseeing the lawsuit said there was no definitive proof that Netflix concealed the effects of password-sharing on its ability to grow subscribers, calling the trend “one potential threat to growth among many.”
Separate from the lawsuit, Netflix began implementing a multipoint strategy to grow subscribers two years ago, debuting a cheaper tier of service that is supplement by advertising and implementing a password-sharing crackdown that encouraged freeloaders to pay for their own accounts. The strategy was initially blamed for lower churn when it debuted in Latin America, but quickly helped grow Netflix subscribers in that region, the United States and other parts of the world.
Starting in 2025, Netflix will stop sharing its subscriber data on a regular basis, opting instead to focus on other metrics, including time spent engaging with content.
