Netflix’s crackdown on password sharing appears to be paying off.
The streaming giant said Wednesday it added nearly six million paid subscribers in the three months ending in June, bringing its total to more than 238 million worldwide.
After starting its wider rollout earlier this year, the company said it has now rolled out paid sharing — its effort to stop users from sharing accounts with others for free — in more than 100 countries. Netflix said revenue in those territories is now higher than the service launched and that “subscriptions already outnumber cancellations.”
Netflix’s chief financial officer, Spencer Neumann, called Netflix’s “primary revenue accelerator of the year” the fee-sharing launch during the company’s second-quarter earnings call.
“The majority of our revenue growth this year has come from growth in the number of new paying members, and this is largely driven by our payment sharing launch,” he said.
Netflix’s decisions come at a key moment, as the streamer hopes to boost revenue by curbing password sharing and introducing an ad-supported subscription option while facing a new challenge: strikes by Hollywood’s actors and writers unions, which could affect the future of its original shows and movies.
Netflix co-CEO Ted Sarandos addressed the strikes on a call Wednesday, saying it was “not the outcome we wanted.”
Asked if the company would run out of original content if the actors’ and writers’ strike lasted, Sarandos said the company produces “a huge amount of all kinds of content,” pointing to Netflix’s investments in unscripted and international content, among other things.
“The real thing is that the strike has to come to an end so we can all move on,” he added.
Netflix’s password-sharing glamdown helped boost revenue in the quarter, which was still shy of Wall Street analysts’ expectations. Netflix reported revenue of nearly $8.19 billion for the quarter, compared to $8.3 billion expected by Wall Street. It reported net income of $1.49 billion, up 3% from the same period last year.
“While we have made steady progress this year, we still have a lot of work to do to re-accelerate our growth,” the company said in a letter to investors about the results. Subscriptions to its low-cost, ad-supported plan have doubled since the first three months of the year, but the company noted that “current ad revenue is not material to Netflix.”
Shares of Netflix
(NFLX) It fell more than 4% in after-hours trading on Wednesday following the results.
Netflix said it will post revenue of $8.5 billion in the current quarter, a 7% year-over-year increase but nearly $8.7 billion below analysts’ expectations. The company expects net additions paid in the September quarter to be similar to the June quarter numbers.