Netflix is scrapping cheap ad-free subscriptions to drive users to an expensive deal
Netflix added nearly 6 million subscribers in the spring as a password-sharing restriction forced customers to pay for their own accounts.
The company gained 5.9 million paying customers in the second quarter of the year, bringing the total to 238.4 million. It was well above Wall Street’s expected additions of 1.8 million.
The record number of subscribers came after Netflix began cracking down on millions of subscribers who share their logins with friends and family. It is believed that a quarter of Netflix’s 15 million subscribers in the UK share their password.
Netflix, which streams shows like Emily in Paris (pictured), noted that the Basic plan, which cost £6.99 a month, would no longer be available to new or re-joining members
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: ‘Netflix’s crackdown on account sharing was an uncomfortable hammer blow for those of us who’ve paused their viewing, but it has boosted the streaming giant’s subscriber base.
The sheer strength of Netflix’s appeal means that millions chose to set up their own legitimate accounts amid concerns that the move would trigger a mass exodus.”
Netflix has also rolled out its ad-supported option for viewers, which offers a cheaper plan for cash-strapped consumers and an entirely new revenue stream for Netflix through advertising.
This costs £4.99 per month in the UK. Netflix said it had expanded its sharing crackdown to more than 100 countries and after the results it would expand the policy to the remaining areas.
The increase in subscribers came as the company reported profits of nearly £1.2 billion for the three months to June, up from £1.1 billion last year, while revenues rose 2.7 percent to £6.3 billion.
The surge in subscribers will come as a welcome relief to Netflix after it endured a rocky 2022, announcing its first drop in paying members in more than a decade in the first half of the year.
In the second quarter of last year, it lost nearly a million subscribers, sending stocks into a freefall and shattering confidence in Wall Street.