Netflix’s password-sharing crackdown is here to stay.
In the second quarter, the streamer added 5.9 million new subscribers, reaching 238.4 million globally. And in the U.S., Netflix added 1.17 million paid subscribers.
Those additions come after Netflix rolled out its paid account-sharing initiative in more than 100 countries, including the U.S., in May. The company now said it will launch paid sharing in almost all remaining countries after seeing fewer-than-expected cancellations.
“The cancel reaction was low, and while we’re still in the early stages of monetization, we’re seeing healthy conversion of borrower households into full paying Netflix memberships as well as the uptake of our extra member feature,” Netflix said in its Q2 shareholder letter. “We are revenue and paid membership positive vs. prior to the launch of paid sharing across every region in our latest launch.”
Though Netflix added only 1.75 million global subscribers in the first quarter, it expects its third quarter to have similar paid net adds as quarter two.
In the U.S. and several other countries where paid sharing has already launched, the account holder can add a member outside of the home for an additional $7.99 a month, or the user can opt to transfer their profile to a new account.
The extra member offering will not be available in the remaining countries yet to launch password sharing, including Indonesia, Croatia, Kenya and India, which the company said is due to the fact it recently cut prices in many of those markets.
“Penetration is still relatively low in many of them, so we have plenty of runway without creating additional complexity,” the letter read.
With the launch of paid sharing, Netflix has “increased confidence” in its financial outlook and is expecting revenue to accelerate “more substantially” in the second half of the year.
Initially, Netflix expected a “cancel reaction” to the paid sharing rollout in the U.S. The company even pushed back the rollout date in order to take advantage of learnings from markets where the requirement had already launched.
However, the company noted in its first-quarter earnings release that the password crackdown would ultimately lead to “increased acquisition and revenue.”
Thus far, that appears to be the case.