Netflix co-CEO Greg Peters says internal viewing data before and after introducing paid password sharing shows that the new policy hasn’t alienated viewers, as some initially expected. He said that it has been shown that.
The company on Thursday reported that its first-quarter subscriber count increased by 9.3 million compared to the same period last year, in part because of its password policy, which imposes a price on sharing login credentials. The move is a 180-degree turn from the free sharing ethos of the company’s startup phase, which ultimately became a bullish tool for advertising. The new ad-supported tier, which costs less than paying for an additional account, also benefited from new password settings, helping Netflix gain around 270 million subscribers worldwide.
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During the company’s earnings call, Peters discussed internal data from “owner households,” households that are not affected by the new policy. He said subscriber viewing in the first quarter was “stable” compared to the same period in 2023. “That’s a pretty good sign that our engagement is sustained, and it kind of cuts through the noise around paid sharing,” he said. He said.
Wall Street and some tech industry observers had predicted trouble in 2021 and 2022, when the company ramped up efforts to force customers who share their passwords to pay for the privilege. . Some said it was a last-ditch move taken at a time when the company was at a disadvantage, with subscriber numbers dropping for the first time in 10 years and many new, well-funded competitors emerging in the market. Company executives also said they needed to proceed carefully to avoid alienating customers and causing churn rates to skyrocket.
Peters acknowledged that overall the policy would cause short-term viewership declines. “We’re essentially cutting off some viewers who aren’t paying, so there’s going to be some loss of viewership associated with that,” he explained. Still, “despite that impact, and despite the general pressures of intense competition,” “we believe our efforts remain healthy,” he continued.
Netflix executives avoided using the word “crackdown” to describe their latest stance on passwords, saying instead it’s an effort aimed at allowing them to continue spending on content and other subscriber benefits. It is characterized as. During the call, Peters explained that password processes are constantly evolving. “As with all important parts of the product experience, we are constantly testing and iterating,” he said.
Mr. Peters and his colleagues asked one analyst how much of an impact this had on the initial estimate that 100 million people were lending their passwords to non-subscribers. “Rather than thinking about specific groups or specific numbers, we are seriously thinking about this as developing more mechanisms, more effective ways to convert the people we interact with. “Yes,” he answered. Peters said these interactions include not only “borrowers,” but also “returning subscribers” and people who have never subscribed before.
“We want to find the right call to action, the right offer, the right engagement at the right time to drive customers to conversion,” he said. “We believe there is still room to improve this process. We foresee several improvements in this value translation mechanism and expect it to contribute to business growth over the coming quarters.” .”
Peters said better engagement with new, repeat and existing subscribers will allow us to “effectively reach more of the 500+ million smart TV households. ” he said. He added that in many major markets, Netflix accounts for less than 10% of total TV viewing time, and there is “plenty of room to run” in engagement.
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