Netflix will implement measures to crack down on account sharing in several markets, including India, Indonesia, Croatia, and Kenya, beginning July 20. The move is aimed at boosting the company’s revenue growth in the latter half of 2023.
Netflix’s Unique Strategy: Tackling Account Sharing in Untapped Markets Following Price Cuts
However, in India and other countries where paid sharing has not been introduced yet, Netflix will adopt a different approach to address the account sharing issue. Instead of offering the “extra member” option, which allows users to pay an additional fee for sharing their account with non-household members, Netflix will not introduce this feature in these markets. The decision is influenced by the recent price cuts in many of these countries and their relatively low penetration, which means there is ample opportunity for growth without adding complexity.
Netflix had previously reduced its prices in India by 20-60 percent in December 2021, leading to significant engagement growth of nearly 30 percent year-on-year (YoY) and a revenue increase of 24 percent in 2022 compared to 19 percent in 2021.
Crackdown Success: Netflix’s Paid Sharing Expansion Boosts Revenue and Membership Growth
The crackdown on password sharing has been successful in most markets, as indicated by the expansion of paid sharing to over 100 countries, resulting in higher revenue and paid memberships. Netflix added 5.9 million paid members in the second quarter of 2023, marking a significant improvement over the previous year’s performance.
The company remains optimistic about the monetization potential of paid sharing and expects it to be a primary revenue accelerator in the coming quarters, particularly in Q4 2023. Netflix’s revenue for Q2 2023 increased by 2.7 percent YoY to $8.19 billion, with operating income rising by 16 percent YoY to $1.8 billion.
Furthermore, Netflix mentioned that its ad-tier subscribers nearly doubled since the first quarter, although the current ad revenue is not yet substantial. Nevertheless, the company believes that over time, it can develop advertising into a multi-billion-dollar incremental revenue stream, providing a promising avenue for further growth.
