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Forbidding subscribers to share their roommate’s cousin’s former babysitter’s Netflix password is paying off—Netflix gained 5.9 million subscribers last quarter following its password crackdown earlier this year, the company announced during its earnings call yesterday.
That’s an 8% YoY, totaling 238 million global subscribers.
“Now that we’ve launched paid sharing broadly, we have increased confidence in our financial outlook,” the company told shareholders, with “sign-ups already exceeding cancellations.”
While the company did miss on revenue expectations, it’s facing many of the same headwinds competitors are facing—a softer ad market, striking writers and actors, and a complex streaming environment. Netflix told investors it actually expects to bank more money this year, about $5 billion, than it had earlier anticipated because it paused content spend due to the strikes.
So, about those new subscribers: They won’t be signing up for Netflix’s basic plan. RIP.
The company cut its $9.99 ad-free plan in the US, UK, and Canada, essentially funneling subscribers looking for a low-cost tier into its now eight-month-old ad-supported plan. While the streamer said subscribers opting for ads have “nearly doubled” since the first quarter, advertising revenue “isn’t material” enough to break out yet. FWIW, Netflix said nearly five million people had signed up for its ad-supported tier during its upfront pitch in May.
“Building an ads business from scratch isn’t easy and we have lots of hard work ahead, but we’re confident that over time we can develop advertising into a multi-billion dollar incremental revenue stream,” the company said.