new York The number of subscribers at Netflix increased significantly after the start of the broad crackdown on password sharing. The video streaming giant increased its paying subscribers by 5.9 million to a total of 238.4 million in the second quarter.
For a few weeks now, Netflix has also been taking action in Germany against users sharing an account across a household. Additional money is now due for this. Netflix is betting that affected users would rather pay than cancel the service.
This calculation seems to work out so far. Sales are now higher in each region than before the crackdown on password free riders began, Netflix said after the US stock market closed on Wednesday. Overall, sales increased by 2.7 percent to almost 8.2 billion dollars (around 7.3 billion euros) compared to the same quarter of the previous year. The bottom line was a profit of $1.49 billion, up from $1.44 billion a year earlier. Netflix plans to roll out the new fees for sharing passwords outside of the home in countries where it’s not yet the norm.
Recently, Netflix was not only concerned with the new fee for shared accounts, but also with the recent strike in Hollywood. In the creative headquarters of the American film and streaming business, not only the scriptwriters are now on strike, but also the actors since last Friday. This means that Netflix and Amazon will no longer be able to produce and release new series seasons in the coming weeks and months. The punctual start of films is also in danger. Late-night talk shows have not been produced since early May due to the writers’ strike.
>> Read about this: Actors paralyze Hollywood
The demonstrators in front of the headquarters of Netflix, Paramount and Warner Brothers are not so much concerned with salary increases. Above all, they fear that with the use of artificial intelligence, fewer and fewer actors and fewer screenwriters will be needed. After all, AI has recently made great strides in both areas.
Unions want clear rules for AI
That is why the unions, to which almost everyone in the US film business belongs, are demanding that the use of artificial intelligence should follow clear rules, for example when it is used to write dialogues or when a virtual actor is created based on a human model.
Among other things, they are demanding long-term remuneration for streaming series, which – unlike on television – has not existed so far. Even if a streaming series is sold abroad, the actors should benefit as with TV series. So far, the actors have hardly participated in streaming when a series is successful. The unions want to change that.
Some studios, on the other hand, obviously want the exact opposite. They have submitted proposals that they will own all rights to digital likenesses of actors. Then they would not have to make any payments if, for example, new digital series were invented and shot from existing material.
Netflix relies more on international productions
Netflix wants to make even more use of international productions in the future. “You have to invest across genres, cultures and languages,” said Netflix, pointing to series from Mexico, Colombia and Japan that are also successful in the United States. Some observers also see this as a direct reaction to the strikes of the past few weeks.
“With the actors and screenwriters on strike in Hollywood, Netflix’s global content strategy looks like a brilliant move,” said media and technology expert Raj Shah of consulting firm Publicis Sapient.
“The longer the strike lasts, the more Netflix can gain over its competitors thanks to its diversified video library and global production unaffected by the strike,” he said. For this to happen, however, more foreign productions would have to be successful in the USA, as has happened with “Alice in Borderland” from Japan and “The Glory” from Koreo.
On the other hand, unlike two years ago, there is hardly any talk of video games. Instead, advertising should now bring sales in addition to subscriptions. “The lack of video game citations in the letter to investors suggests that advertising is the sparkling object that most dictates the company’s focus,” Ross Benes of research firm Insider Intelligence told CNBC. Advertising can be placed on particularly cheap subscriptions.
The Netflix share price had fallen by five percent in after-hours trading. However, observers blame profit-taking after the price had risen sharply recently.
More: How much does account sharing cost and how much is a subscription?