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The streaming company is planning a broad roll-out of the crackdown after trialing the measure in several countries, while its DVD-by-mail service is ending in September.
Netflix is postponing a broad roll-out of its password-sharing crackdown to later this year, to prepare for a “cancel reaction” in markets where its introduced.
The streaming company has trialled the long-anticipated crackdown in several countries, with launches in Canada, New Zealand, Spain and Portugal earlier this year. Netflix originally planned to roll out this measure to the US in the first quarter of 2023.
But in its Q1 earnings results, the company said it has seen an impact in “near-term member growth” in countries where the measure is introduced.
As a result, Netflix is planning a “broad roll-out, including in the US” in its second fiscal quarter of 2023, which ends on 30 June.
“While this means that some of the expected membership growth and revenue benefit will fall in Q3 rather than Q2, we believe this will result in a better outcome for both our members and our business,” Netflix said in a letter to shareholders.
The company also claims the measure has proven successful in countries where it has been introduced. Netflix said revenue grew in these countries as former “borrowers” activated their own accounts and existing members added extra member accounts.
“In Canada, which we believe is a reliable predictor for the US, our paid membership base is now larger than prior to the launch of paid sharing and revenue growth has accelerated and is now growing faster than in the US,” Netflix said.
Netflix made the announcement in its first quarter results for 2023, which saw moderate growth in both revenue and subscribers. The company’s revenue reached $8.16bn, a growth of 3.7pc compared to the same period last year.
This is an improvement in quarterly growth compared to the end of 2022, but is slower than the first quarter of 2022, which saw growth of nearly 10pc in revenue. Netflix’s total subscribers has grown to 232.5m, up from 230.75m at the end of 2022.
End of the DVD era
Alongside the earnings results, Netflix has also announced that it is winding down its mail-order DVD business after 25 years.
The company said it’s final discs will be shipped on 29 September this year, ending its DVD.com business “on a high”.
Netflix co-CEO Ted Sarandos said the company’s red envelopes – which delivered DVDs directly to consumers – “paved the way for streaming” as it changed the way people watched shows and movies at home.
“From the beginning, our members loved the choice and control that direct-to-consumer entertainment offered: the wide variety of the titles and the ability to binge watch an entire series,” Sarandos said.
“We feel so privileged to have been able to share movie nights with our DVD members for so long, so proud of what our employees achieved and excited to continue pleasing entertainment fans for many more decades to come. “
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