Netflix is “more than a year out” from any price increases in its major markets like the U.S. as it looks to spur revenue growth from its password-sharing crackdown, CFO Spence Neumann said.
The streamer has “largely paused” price hikes after it began rolling out the paid-sharing program starting in May 2023, Neumann said on the Q2 earnings interview. “Most of our revenue growth this year is from growth in volume, through new paid memberships. And that’s largely driven by our paid-sharing rollout,” he said. “It is our primary revenue accelerator in the year.”
Netflix most recently raised prices in the U.S. and other major markets in the first half of 2022, under which its Standard plan — its most popular tier, which provides two simultaneous HD streams — increased by $1.50, to $15.49 per month.
The company reported Q2 earnings results Wednesday, announcing 5.9 million net new paid subscribers and saying that its broad crackdown on password sharing was yielding more sign-ups than cancelations. After the report, Netflix shares were down as the streaming giant’s quarterly revenue of $8.19 billion came in shy of Wall Street’s $8.3 billion consensus expectations.
Netflix didn’t quantify how much of the subscriber gains were due to the password-sharing crackdown, but that it is “seeing healthy conversion of borrower households into full paying Netflix memberships as well as the uptake of our extra member feature,” it said in the Q2 letter to shareholders.
Netflix has informed customers in the U.S. and more than 100 other countries thatanyone who uses their accounts and lives outside their households will either need to be added as an “extra member”or pay for their own subscription — otherwise, the company will begin to block access to unauthorized devices. In the U.S., an extra member add-on is $7.99/month on top of the cost of a Standard or Premium plan.
Starting Wednesday (July 19), Netflix said, it will “start to address account sharing between households in almost all of our remaining countries.” In those remaining markets, the streamer is not offering an extra member option “given that we’ve recently cut prices in a good number of these countries (for example, Indonesia, Croatia, Kenya and India) and penetration is still relatively low in many of them so we have plenty of runway without creating additional complexity.”
Meanwhile, earlier Wednesday, Netflixkilled off the lowest-cost option with ads(the Basic plan, $9.99/month in the U.S.) for new members in the United States and the U.K. in a bid to drive up subscriptions to the ad-supported service (as well as to the Standard $15.49/month plan without ads).
