Netflix Hits Record High of 232.5 Million Subscribers, Password Crackdown Coming Soon

(CTN News) – On Tuesday, Netflix announced that its subscriber count reached a new high of 232.5 million in the first quarter of the year and that its new ad-supported tier was successful.

With a quarterly profit of $1.3 billion, Netflix was in line with analyst forecasts, but the company said it would defer a widespread crackdown on password sharing “to improve the experience for members.”

Instead, this quarter is when Netflix plans to release its premium password-sharing alternatives to customers.

“It’s clear that the company wants to manage any fallout from the new strategy,” said Jamie Lumley, an analyst at Third Bridge.

In a letter to shareholders, Netflix said that some of the membership and revenue benefits from the shift had been delayed because of this.

In a live-streamed earnings interview, Netflix co-CEO Greg Peters stated that the company has experimented with “borrower” or “shared” accounts in a few places but aims to launch them in the United States and elsewhere this month.

Netflix has stated that it is taking time to ensure its users can watch their favorite shows and movies on the go and from any of their connected devices, including smart TVs, tablets, and smartphones.

Peters stated, “We learned from this most recent series of launches about some improvements we can do.”

It was more beneficial to take the time to absorb the lessons learned and ensure a smooth transition for members.

Netflix’s new ad-supported subscription tier may be in its infancy, but it’s already generating more interest than the company had anticipated, and “very little switching from our standard and premium plans.”

According to Insider Intelligence, Netflix’s new advertising tier is expected to generate $770 million in revenue this year and more than $1 billion in 2019.

In response to slowing growth in 2017, Netflix, headquartered in Silicon Valley, shifted its attention to developing a cheaper subscription tier supported by advertising.

Netflix’s original intention was to encourage password-sharing viewers to upgrade to paid membership without upsetting existing viewers.

Co-CEO Ted Sarandos remarked, “This account-sharing initiative helps us have a larger base of potential paying members and grow Netflix long term.”

Insider Intelligence predicts that 2018 will be the first year Americans spend more time watching digital video on services like Netflix, TikTok, and YouTube than traditional television.

According to the market researcher, fewer than half of all daily viewing would be of “linear TV” this year.

According to Insider Intelligence chief analyst Paul Verna, “This milestone is driven by people spending more and more time watching video on their biggest and smallest screens, whether it’s an immersive drama on a connected TV or a viral clip on a smartphone.”

Insider Intelligence reports that in digital video, Netflix and YouTube are virtually tied for viewership.

After next year, Netflix may increase its annual investment in content from approximately $17 billion to $20 billion.

According to Lumley, “the streaming wars are still on,” as evidenced by Netflix’s continued subscriber growth.

While the company has made progress since last year, it is still feeling the heat from the competition.

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