New York, Dusseldorf Since Netflix took action against users who share their passwords with other households, the number of customers has increased significantly. The number of subscriptions increased by 5.9 million in the second quarter, as the streaming giant announced on Wednesday after the US stock market closed. That was about three times as much as expected. In total, Netflix now has 238.4 million customers worldwide.
In Germany, too, Netflix has been blocking the accounts of customers who share them with friends from other households for a few weeks. In this country, they now have to pay an additional fee of almost five euros per month.
Netflix is betting that affected customers would rather pay than cancel the service. So far, this calculation seems to be working out. Sales are now higher in each region than before the crackdown on password free riders began, Netflix said.
Overall, sales increased by 2.7 percent to almost 8.2 billion dollars. The bottom line was a profit of 1.49 billion dollars after 1.44 billion dollars in the previous year. Netflix plans to roll out the new password-sharing fees in 100 more countries.
The company had reacted to the weakening subscription numbers, especially in the previous year. There is increasing competition in the video streaming business. Financially strong competitors such as Disney or Amazon are winning new users with their offers and strong film brands. Netflix stated that around 100 million customers worldwide share the password with people from other households.
In order to stop the loss of customers, Netflix has also introduced a cheaper tariff, but users have to accept advertising. This project also seems to be working so far: the number of users of this tariff has almost doubled within three months – albeit from a lower level, it said. With the Disney+ streaming service, 40 percent of new customers recently opted for the cheaper version with advertising.
Saving efforts by customers and strikes in Hollywood: New problems threaten Netflix
Despite the good development, Netflix is threatened with new problems. Due to the high inflation and the weakening economy, users in Germany in particular want to save more on streaming services, shows a current study by the Simon-Kucher consultancy. In Germany, 30 percent of users plan to cancel a subscription. “The hurdle to winning new customers is getting higher,” says Lisa Jäger, streaming expert at Simon-Kucher.
In addition, the entire film and TV industry is coming under pressure because of the double strike by actors and screenwriters in the USA. This means that Netflix will no longer be able to produce and release any new series seasons in the coming weeks and months. The punctual start of films is also in danger.
>> Read about this: Actors paralyze Hollywood
The demonstrators in front of the headquarters of Netflix, Paramount and Warner Brothers are less concerned with salary increases. They fear that with the use of artificial intelligence (AI) fewer actors and screenwriters will be needed.
Unions want clear rules for AI
The unions, to which almost everyone in the US film business belongs, want clear rules for the use of AI, for example when it is used to write dialogue 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.
Unions demand clear rules for the use of AI.
(Photo: IMAGO/Cover Images)
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.
The company announced that Netflix intends to use international productions even more in the future. “You have to invest across genres, cultures and languages,” said the company, pointing to series from Mexico, Colombia and Japan that are also successful in the United States.
Observers also see this as a reaction to the strikes of the past few weeks. “The longer the strike lasts, the more Netflix can gain over its competitors thanks to its diversified video library and global production, which are unaffected by the strike,” said media and technology expert Raj Shah of Publicis Sapient consultancy.
Restrained outlook
Customers’ propensity to save and the strikes in Hollywood may have contributed to Netflix’s cautious outlook. The outlook for the current quarter fell short of expectations. Netflix promises $8.5 billion in revenue, $200 million less than experts had predicted. “While we’ve made steady progress, we still have more work to do to accelerate our growth,” the company said.
Netflix shares fell as much as 5 percent in after-hours trading on Wednesday. Observers also explain this with profit-taking after the price had recently risen sharply.
More: How much does account sharing cost and how much is a subscription?