Netflix‘s crackdown on password sharing might have been bad news for many of us still lurking on our friends’ accounts.
But for the streaming giant, the risky move has now translated into soaring profits and record subscriber numbers.
In the first three months of 2024, Netflix added 9.3 million new customers, bringing its total subscriber base to almost 270 million.
And with subscription prices on the rise, this has given the company a quarterly profit of more than $2.3bn (£1.85bn) – up from $1.3bn (£1bn) in 2023.
However, the company also revealed that it will no longer be reporting its subscriber numbers from next year, sparking concerns that growth may soon slow.
Netflix password sharing crackdown is paying off as the streaming giant added another 9 million subscribers in the first three months of this year
Despite price rises, Netflix revealed that year-on-year subscriber growth was the highest it had been in the last 12 months.
In the first three months of the year, subscriber growth rose to 16 per cent compared with only 4.9 per cent this time last year.
Much of this growth is likely due to the streaming service’s recent crackdown on password sharing.
After investors were rattled by Netflix’s first ever net loss of customers in 2020, the company implemented a system of paid sharing.
Rather than sharing an account with friends, households now have to pay a fee to let other people use their accounts.
By looking at the IP address and location of your device, Netflix checks if you are part of the household paying for the account.
If the service detects what it believes to be password sharing, the device is blocked and users are given an option to make their own account.
Although it was considered a gamble by some at the time, this decision appears to have paid off.
At the end of last year, Netflix added 13 million new subscribers and brought its total to 260.28 million.
However, Netflix attributes its success to a ‘drumbeat’ of hits which have boosted engagement.
The company says its biggest successes included Society of the Snow with 98.5m views, Fool Me Once with 98.2m views, and Griselda with 66.4m views.
Netflix sites a ‘drumbeat’ of big hits including crime drama ‘Griselda’ (pictured) which scored 66.4 million views
Netflix now retains the top spot as the most popular streaming service in the world, pulling ahead of Amazon Prime Video which has 220 million subscribers worldwide.
This growth comes as Netflix has made several changes to how it prices its subscriptions.
Currently, the cheapest plan with ads costs £4.99 in the UK ($6.99 in the US) compared with £10.99 in the UK ($15.49 in the US) for the ad-free subscription.
A premium plan meanwhile, which includes HD streaming and extra members, now costs £17.99 in the UK ($23 in the US).
Netflix recently increased the price of basic and premium plans by £1 in the UK ($2 in the US) and £2 in the UK ($2 in the US) respectively.
During the last months of 2023, a large number of the 13 million new subscribers opted for the cheapest plan with ads.
In the 12 countries where adverts are offered, including the UK and US, these plans accounted for 40 per cent of new subscribers.
This latest 2024 update does not include a breakdown of subscribers by account type.
Netflix’s growth comes even after the company has raised prices for most subscription tiers. However, this will be the last year the company reports subscriber numbers
However, this will be one of the last times that Netflix offers an insight into its subscriber numbers.
In the letter, Netflix announced that it would stop reporting subscriber numbers, starting from the first quarter of 2025.
The company wrote: ‘In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential.
‘But now we’re generating very substantial profit and free cash flow’.
As an explanation for the decision, the company also pointed to its new sources of revenue, including the addition of paid sharing accounts and different subscription tiers.
Netflix has scored big with international hits such as Society of the Snow (pictured) which one 12 awards at the Goyas in Spain, the most of any film in two decades, and racked up 98.5 million views
The letter also points to an expansion in areas like gaming and sports.
It adds: ‘We’re very excited for our much anticipated live boxing match between Jake Paul and former heavyweight champion Mike Tyson, which we believe will become a must watch event this summer.’
However, the announcement caused concern among investors who saw the decision as a sign subscriber growth was likely to slow.
Facebook’s parent company, Meta, and X, formerly Twitter, both stopped reporting subscriber figures as their growth slowed.
Technology and media analyst, Paolo Pescatore of PP Foresight, told MailOnline: ‘The movement to no longer disclose quarterly subscriptions from next year will not go down well.
‘Subsequent quarters might be challenging due to seasonality; which typically underperforms compared to other quarters as people spend more time outside of the home.’
Immediately following the announcement Netflix’s share price was almost five per cent lower.
However, the share price is still up 30 per cent since the start of the year, close to the 2021 peak.
