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Netflix is postponing the broad rollout of its password-sharing crackdown, which was originally scheduled for the first quarter.
Netflix Inc (NASDAQ: NFLX) released mixed financial results for the first quarter that ended March 31 as it postponed its password-sharing crackdown. While the company topped analysts’ estimates in the quarterly earnings, revenue came slightly down. Earnings came in at 1.13 billion or $2.88 per share, a little over Wall Street’s estimates of $1.6 billion or $3.53 per share. Also, it went below the expected revenue of $8.18 billion to $8.16 billion. However, the quarterly revenue grew from $8.87 billion recorded the year before.
Initially, the streaming media company fell more than 10% but rebounded in extended trading sessions. At press time, NFLX is down 0.21% to $333.02, closing at $333.70. It has also gained over 47% in the last year and added more than 13% to its year-to-date record. Netflix has popped 2.26% in the last three months and another 13.54% over the past month. In the last five days, the streaming media giant went up 0.81%.
During the first quarter, the company added 1.75 million net subscribers after experiencing low subscribers last year. The new tier that supports ads pushed the subscriber increase, resulting in a total global subscriber count of 232.5 million by Q1 2023.
Netflix Postpones Password-Sharing Crackdown to Q2 2023
Netflix is delaying the broad rollout of its password-sharing crackdown, which was originally scheduled for the first quarter. The company is shifting from its original plan to the second quarter.
“While this means that some of the expected membership growth and revenue benefit will fall in Q3 rather than Q2, we believe this will result in a better outcome from both our members and our business,” wrote the company.
According to Netflix, there was significant subscriber growth in international markets where the password-sharing initiative has become active. In late 2022, the company announced plans to begin taking measures against people using others’ passwords to log in. Netflix explained that around 43% of its users globally engage in password-sharing, meaning over 100 million households share accounts. The media company lamented how the act had affected its business and ability to invest in new content. However, it expects the crackdown on password-sharing and the newly-added ad-supported tier to boost profits.
Speaking on the earnings call, Netflix co-CEO Greg Peters said on Tuesday that the launch of the password-sharing crackdown would be broad. He added that the move would include US customers and more.
Furthermore, Netflix expressed its pleasure in the development of password-sharing. The company said it recorded cancellations in Latin America following the announcement. It noted that the people who borrowed passwords would later own active accounts and add existing members as “extra member” accounts. Hence, Netflix expects increased revenue due to the “paid sharing” initiatives.