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Password Sharing Crackdown Paying Off For Netflix

Password Sharing Crackdown Paying Off For Netflix

Netflix’s decision to stop password sharing, which kicked off in Australia, appears to be paying off, with their shares and revenues rising in recent weeks.

The decision to try to grow revenue share by hitting existing users comes at a time when consumers are cutting back on their streaming subscriptions, with the decision to force password sharers to take out a new subscription leading to additional growth claim observers.

This strategy, along with the debut of a lower-cost tier with advertising, could keep user growth robust, supporting an extended rebound in the stock claims Bloomberg.

“There are millions of people on shared accounts, and if you get a few bucks per month out of even a small percentage of them, that creates a huge recurring revenue base that can supplement current growth,” says Jamie Lumley, senior analyst at Third Bridge, who sees the crackdown as a “huge opportunity” for the company.

This year Netflix shares are up 18 per cent, but despite these gains, the stock remains 50 per cent below a peak from late 2021.

The stock fell 1% yesterday.

Off the back of the crackdown on password sharing revenue is expected to increase 8.6% this fiscal year, before accelerating to almost 12% growth in fiscal 2024. It rose 6.5% last year.

Bank of America expects subscriber results markets such as Australia the US and Canada “will be significantly stronger than current consensus,” citing an analysis of third-party data that it sees as “an encouraging sign that NFLX’s recent crackdown on password sharing is driving new subs to the service.”

Netflix has said that more than 100 million people are using the service without paying for it. The company reports first-quarter results April 18, and analysts expect it will add 2.3 million subscribers, according to data compiled by Bloomberg. That will bring total paid memberships to 233 million.

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