Slowdown in Netflix's Subscriber Growth Following Password-Sharing Crackdown

Netflix's Subscriber Growth Slows

On Thursday, Netflix announced a dramatic slowdown in subscriber growth over the summer, indicating that the significant gains from their crackdown on password sharing are softening.

During the July-September period, Netflix added 5.1 million subscribers, a decline of 42% compared to the same timeframe last year. Despite this drop, the company reported revenue and profit increases that outpaced analyst expectations, with a profit of $2.36 billion or $5.40 per share, marking a 41% year-over-year increase. Revenue rose 15% from last year, reaching $9.82 billion, and is projected to continue on a 15% trajectory in the upcoming quarter.

This latest quarter's subscriber growth represents the lowest figure for any three-month period since early last year, signifying that Netflix is entering a new phase since implementing the ban on account-sharing. This crackdown addressed an estimated 100 million users who accessed Netflix's services without paying.

Initiated after a rare subscriber loss following the pandemic in 2022, the crackdown contributed to the addition of 57 million subscribers between June 2022 and June 2023, averaging over 7 million new users each quarter. In addition to this, Netflix has also introduced a low-priced subscription model featuring ads, marking a significant milestone for the company as it seeks to enhance revenue from its advertising segment.