A password crack down by Netflix has seen revenues boom, now the big US streaming Company is dumping their basic entry level service in an effort to drive adoption of the more expensive Netflix service.
The move comes despite inflation hurting cost of living and consumers staying home more.
The streaming giant added more than 13.1 million subscriptions in the three months ended in December.
That was the most for any quarter since 2020.
A company executive said, “Our healthy top line growth reflects the benefits of paid sharing, our recent price changes and the strength of our underlying business driven by a strong slate,.”
Revenue was $0.1B (2%) above our October forecast due to favorable F/X movement and stronger than anticipated membership growth.
“In Q4‘23, like the quarter before, our ads membership increased by nearly 70% quarter over quarter, supported by improvements in our offering and the phasing out of our Basic plan for new and rejoining members in our ads markets. The ads plan now accounts for 40% of all Netflix sign-ups in our ads markets and we’re looking to retire our Basic plan”.
This move is consistent with a broader trend towards the introduction of ads to paid-for subscription video on demand services a move that could affect several Companies who stream Netflix.
The problem for those who signed up to Netflix after previously using a borrowed log in is that most of their new members opted for the company’s cheapest plan with those users now facing either to accept advertising a move that could hurt free to air radio stations or step up to a premium plan.
Netflix said in the 12 countries where it offers adverts, including Australia, the plan accounted for 40% of the new sign-ups.
The gains are an ironic twist for a firm that resisted calls to sell ads for years, saying such a move would hurt the viewer experience and complicate its business with privacy risks and other issues.
But the company was jolted by an unexpected subscriber decline in the first half of 2022, followed by a fall in profits, which prompted it to seek out new ways to bring in new viewers – and more money.
As well as adverts and the password crackdown, it is experimenting with more live events to bring in new audiences.
Many of its rivals are making similar moves.
Amazon, for example, is trying to boost its slate of live sports events. It is also due to start showing adverts to Prime members when they watch starting this month unless they pay extra per month.
Paolo Pescatore, an analyst at PP Foresight, said the numbers validated Netflix’s strategy.
“Another cracking quarter to finish the year,” he said. “These latest results reaffirm that Netflix is firmly the king among all streamers.”
