You won't like this, but Netflix's password-sharing crackdown worked

Last year, Netflix implemented a crackdown on password sharing in an effort to boost subscriber growth. Although users hated the idea and company executives feared backlash, Netflix’s move has been a resounding success.

Bloomberg reports that Netflix saw a 9.33 million jump in customers in the first quarter of 2024. Analysts predicted the streamer would add around 4.84 million by this time, meaning Netflix nearly doubled estimates.

The influx of new subscribers is attributed to the company’s password-sharing crackdown. Netflix believed that over 100 million viewers were using an account they weren’t paying for. The increase in subscribers is also believed to be due to the strong slate of original programming as of late. This includes shows such as 3 Body Problem, Love Is Blind, Fool Me Once, and Griselda.

In addition to beating new subscriber estimates, it also surpassed forecasts for sales and earnings. It’s said the company brought in $9.33 billion in sales, compared to the $9.26 billion that was expected. On top of that, it saw a $2.33 billion growth of net income, which is also above expectations. This strong showing has raised the market value of Netflix above $260 billion.

Despite the positive reports, the executives aren’t popping champaign bottles yet. Shares were up by 25% this year all the way through Thursday. However, those shares dropped as much as 8% when trading started on Friday. In a letter to investors, the executives said to expect fewer new subscribers during this period.

In another sign showing Netflix doesn’t expect the success to last, the firm stated that it will stop reporting paid quarterly membership and revenue per subscriber. This is scheduled to take effect sometime in the first quarter of 2025. However, they will continue to report major subscriber milestones.

Given the success of Netflix’s password-sharing crackdown, it’s possible we could see other services implement something similar.