Netflix Password-Sharing Crackdown Pays Off as Company Records Surge in Subscriptions

American subscription video-on-demand top streaming service Netflix’s crackdown on password sharing seems to be paying off, as the company records a surge in subscriptions.

During the four days following Netflix’s announcement about limiting accounts to a single household, the company saw an increase in subscribers in the U.S., than in any other four-day period since 2019.

Reports reveal the streaming giant saw almost 100,000 daily sign-ups on both May 26 and May 27. Average daily Sign-ups reached 73k during that period, a 102% increase from the prior 60-day average. These exceeded the spikes in sign-ups Antenna observed during the initial U.S. Covid-19 lockdowns in March and April 2020.

Shares of Netflix rose over 2% on Friday morning, and have gained about 17% since the May 23rd password crackdown.

Netflix password crackdown is coming after analysts revealed that the company and other U.S. streaming video services lose about $25 billion a year in potential revenue due to password sharing.

Netflix previously turned a blind eye to password sharing because it was fueling growth. The company didn’t always have a problem with subscribers sharing their passwords.

In 2016, the company’s CEO Reed Hastings described the practice as a “positive thing”, because so many password sharers eventually got their own accounts.

However, last year it said that it was going to crack down on password sharing because it hurts its bottom line. It has previously estimated that more than 100 million households worldwide share an account.

Netflix says it has no choice but to crack down on “unpaid viewing” as subscriber growth slowed. While executives say they know the new policy isn’t popular and some people may cancel their accounts, they hope to lure them back with quality programming.

In a bid to reduce its lose on password sharing, in May 2023, Netflix officially began to crackdown on users who share passwords in the United States as it looked to increase revenue in what has become a saturated market.

Also, the company began to clamp down on password sharing in several countries earlier this year, which includes Spain, Portugal, including Canada, and New Zealand.

Netflix said in an earnings call last month that it has seen a cancel reaction in each market when it announced the news about the paid sharing option, but then it sees increased acquisition and revenue.

With the new policy, only users who are part of a Netflix Household, those who are using the same internet connection, will be able to access the account

Those who are currently borrowing a Netflix password will get an update when they try to log in that tells them how to start their own account. With the recent surge in revenue and subscriptions, Netflix obviously did not go wrong on its password crackdown idea.