Netflix’s decision to end password sharing appears to have paid off, with the video streaming giant adding more than 7.6 million new subscribers globally in the first six months of the year, it said in an earnings call Wednesday.
The company said 1.275 million new subscribers came from the U.S. and Canada, while just over 3 million were in Europe, the Middle East and Africa. Asia-Pacific added 2.52 million, while Latin America saw 767,000 new subscribers.
The boost follows a decision by Netflix to start charging people extra if they allow people from different households to use their passwords to login to the service. The company first started testing password-sharing fees in Latin America last year, then introduced them to users in Canada, New Zealand, Portugal and Spain in February. The U.S., U.K. and Australia then received the paid password-sharing option in May.
The surcharge is applied to users who have family members living at a different address, and allows them to login using the same password. People used to do this for free, of course, but Netflix introduced new controls preventing users from doing so – unless they pay the surcharge.
Since the surcharge was introduced, it appears a lot of people have simply decided to bite the bullet and pay for a full subscription, as between April and June, 1.173 million new accounts were added, Netflix said.
It’s worth noting that Netflix is the first of the big streaming platforms to do this. Amazon Prime Video, Disney+, Hulu and Max currently do not charge extra to password sharers, but no doubt they’ll be watching Netflix’s experiment with interest.
Besides its earnings call, Netflix announced further changes this week, saying it will no longer offer its cheapest ad-free subscription package to anyone who is not currently on that plan. The company phased out the same tier in Canada last month and is now doing so in the U.S. and the U.K, too.
What that means is users now only have three options to choose from. They can take Standard with Ads for $7 a month, Standard (ad-free) for $15.50 or Premium for $20. In addition, because of the new password sharing fee, users must pay an extra $8 per month if someone from outside their household uses their account.
Netflix did point out that the Standard with Ads tier is cheaper than all of its major rivals, and that is no lie. Disney+ currently costs $7.99 per month with ads, while Amazon Prime Video is $14.99 per month (with other benefits from Prime).
Netflix co-Chief Executive Greg Peters said in a statement that the company intends to optimise its subscription plan structure, to make it easier for customers to choose a plan. That’s a pretty lame excuse for what is clearly a bid to extract more money from new users and people who wish to upgrade from the Standard with Ads tier. Clearly though, Netflix seems confident that enough subscribers will be okay with it.
