Netflix is pushing back its plans to crack down on password sharing in the US until sometime before July. In an earnings report released on Tuesday, the streamer says it “shifted out the timing of the broad launch from late Q1 to Q2.”
Earlier this year, Netflix committed to cracking down on password sharing “more broadly” toward the end of the first quarter of 2023. While it did roll out new anti-password sharing rules in Canada, New Zealand, Portugal, and Spain in February, these rules never reached the US.
Now, Netflix says that it’s “pleased with the results” of its paid sharing implementation in these four countries so far and that it has helped build up Canada’s paid subscriber base, which is “now growing faster than in the US.”
In these locations — along with some of the Latin and Central American countries where it first began testing password-sharing rules — users must pay extra if they want to share their Netflix accounts with people outside of their “primary” households. Netflix tacks on an extra $7.99 CAD (around $5.97 USD) per month per person in Canada, although the option to share an account with up to two other people is only available with Netflix’s Standard and Premium plans.
Delaying the launch of paid sharing should help Netflix implement some of the improvements it came up with while testing the feature outside the US, Netflix co-CEO Greg Peters explained during an earnings call. The company says it wants to ensure that users can still access Netflix while traveling outside their primary households, as well as give them the tools they need to manage access to their accounts and devices.
“We felt based on those results, it was better to take a little bit of extra time, incorporate those learnings and make this transition as smooth as possible as we can for members,” Peters said.
This marks the first full quarter that lets us see whether Netflix’s ad-supported tier made any meaningful impact on the company. The plan was off to a shaky start when it was first introduced in November, but it started picking up momentum in the months that followed, according to research from data analytics firm Antenna.
Netflix is already making more money per subscriber with its ad-supported tier
Netflix added 1.75 million subscribers in the first quarter of 2023, making for a total of 232.5 million globally. As pointed out by streaming journalist Janko Roettgers, Netflix is already making more money per subscriber with its $6.99 per month ad-supported tier when compared to its cheapest ad-free tier. Netflix chief financial officer Spencer Neumann confirmed this during the company’s earnings call, noting that the company’s “pleased with our per member ad plan economics” while adding that it’s even “higher” than the company’s Basic plan without ads.
That’s likely why Netflix is doing more to attract customers to the ad-supported tier. Netflix says it’s bringing new perks to the plan starting with Canada and Spain, including 1080p video quality instead of 720p and the ability to watch two streams at once. The ad-supported tier currently doesn’t offer the entire library of content available on other Netflix plans, however.
As Netflix looks to offer even more than just on-demand content, the streamer saw success with its Chris Rock: Selective Outrage live comedy special, which landed on its list of top 10 shows during that week. Things didn’t go so smoothly during Netflix’s second attempt at airing a live event, however, as technical issues forced Netflix to cancel its Love Is Blind live reunion special altogether, leaving users only with the ability to stream the episode after it aired.
This is Netflix’s first quarter with co-CEOs Ted Sarandos and Greg Peters at the helm. In January, former Netflix CEO Reed Hastings announced that he was stepping down from the position after 25 years and is now serving as executive chair. It also marks a major milestone for the company as it finally shuts down the DVD business it was known for before becoming the streaming giant it is today.
Update April 18th, 6:36PM ET: Added additional statements and context from Netflix executives.