Netflix’ crackdown on password sharing, or as the streamer calls it a focus on “paid sharing,” will drive growth for years to come, said the streamer’s co-CEO, addressing a Wall Street concern that benefits may top out this year.
“Our paid sharing work, and our ads work, creates a more effective engine to translate all [Netflix] value into revenue growth, and will support increased conversion of our addressable market in many years to come,” promised Greg Peters on the fourth-quarter earnings video call. That engine, he stressed, “works on top of very healthy organic growth” driven by content including TV series and movies, games, and now live events following a long-term deal with WWE announced earlier today.
“We’re excited to be at the point where we’ve operationalized that paid- sharing product work. It’s integrated into everything we do, and we are iterating and improving on it just like we would any other significant part of our product experience.”
Peters was responding to an analyst asking what happens once subscriber and ARM (average revenue per membership) benefits from paid sharing begin to diminish in 2024.
Netflix launched paid sharing in the U.S. in the second quarter of 2023 having successfully tested it in Canada, New Zealand, Spain and Portugal.
In its letter to shareholders this afternoon, the company said, “We believe we’ve successfully addressed account sharing, ensuring that when people enjoy Netflix they pay for the service too. Features like Transfer Profile and Extra Member were much requested, and many millions of our members are now taking advantage of them.”
“At this stage, paid sharing is our normal course of business — creating a much bigger base from which we can grow and enabling us to more effectively penetrate the near term addressable market of ~500M connected TV households (excluding China and Russia), which should increase over time as broadband penetration rises.”
Netflix reported solid numbers after the market close today with a jump in subscribers the big headline. Paid sharing and to a lesser extend a new advertising tier are helping the company re-cement its lead over streaming rivals in a landscape that got very messy post-Covid and is still challenging even for the pioneer.
Peters, former COO and chief product officer, has been co-CEO with Ted Sarandos for the past year.