Netflix Says Crackdown Has Paid Off

Springtime rise in subscribers was biggest since pandemic
By Rob Quinn,  Newser Staff
Posted Jul 19, 2023 5:31 PM CDT
Netflix Defies Expectations With Jump in Subscribers
A member of SAG/AFTRA holds a sign while picketing outside of Netflix studios Wednesday, July 19, 2023, in Los Angeles.   (AP Photo/Mya Vinnett)

The crackdown on password-sharing appears to have paid off handsomely for Netflix. The company said Wednesday that it added 5.9 million subscribers in the second quarter of this year—which ended before the actors' strike began—and revenue was up 3% year-on-year, the New York Times reports. The springtime jump in subscribers is the biggest since the same quarter in 2020, when the company added 10 million during what the AP calls "dramatically different market conditions" in the early months of the pandemic. Analysts had predicted the company would add just 2.2 million subscribers this spring.

In a letter to shareholders, Netflix said the crackdown had resulted in "healthy conversion of borrower households into full paying Netflix memberships," with many more new subscribers than cancellations. The company also said it plans to phase out its cheapest ad-free plan, which currently costs $9.99 per month in the US, the AP reports. Subscribers who already have the plan can keep it for now, Netflix said, but new subscribers will have to choose either the $6.99-per-month plan that includes ads or one of the more expensive ad-free plans at $15.49 or $19.99 a month.

The letter to shareholders didn't say much about the ongoing writers' and actors' strikes, the Times reports, though it said that it was expecting to spend less on content this year and that the unpredictability of production starts could create some "lumpiness" in cash flow. CNBC reports that investors didn't seem enthusiastic about the positive news from Netflix: The company's stock fell by more than 5% in after-hours trading Wednesday, though it is still up more than 60% so far this year. (More Netflix stories.)

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