Netflix is hoping that its paid sharing option will “accelerate” revenue growth in the second half of 2023, the streamer revealed during its second quarter earnings report. This news comes in the wake of the company’s mass password sharing crackdown.
The streamer officially launched its paid sharing option in May, allowing users outside of a subscribed household to subscribe to the household’s plan for an additional monthly fee. This extra charge model is a significant part of the streamer’s plan to limit password sharing. That plan was originally launched in over 100 countries that account for 80% of the company’s revenue base. Since the launch of paid sharing, Netflix has seen higher revenue in each of these regions than it did pre-launch. Sign-ups have also exceeded cancellations for the company.
Starting Wednesday, the company will roll out paid sharing to nearly all countries where Netflix is available.
The streaming company noted that it has “increased confidence in our financial outlook” since launching paid sharing. “We expect revenue growth will accelerate in the second half of 2023 as monetization grows from our most recent paid sharing launch and we expand our initiative across nearly all remaining countries plus the continued steady growth in our ad-supported plan,” the report reads.
The streamer also touched upon the possibility of yet another price hike. Year over year, revenue in Netflix’s second quarter grew 3%, but ARM (average revenue per membership) decreased by 3%. The company in part credited that decline to its choice to limit price increases in the lead-up to the paid sharing launch and its overall growth in countries with a lower ARM.
Looking to the third quarter of 2023, Netflix is predicting ARM will continue to trend flat to slightly down due to a lack of price increases. Revenue from advertising and paid sharing is not expected to be able to offset these factors.
Years ago, Netflix said that password sharing was a “positive thing” and that it had no interest in ads. Now the tables have turned. The same day that Netflix expanded its paid sharing option to multiple counties — a measure to cut down on password sharing — it also quietly eliminated its Basic Plan in the U.S. and U.K., the cheapest subscription tier available that did not include ads.
