Netflix password crackdown delivers millions of new customers

Streaming giant says it will continue to diversify its slate and product features

Netflix showed that its password-sharing crackdown continues to bear fruit, delivering its strongest first-quarter customer additions since the pandemic and further strengthening its position as the dominant global streamer.

The company added 9.33 million subscribers in the first quarter, more than five times the number of customers it added during the same period a year earlier, with its efforts to limit password sharing continuing to bear fruit. Netflix began limiting password sharing in earnest about a year ago. 

Netflix on a TV

Netflix's password-sharing crackdown is paying off. (Nikos Pekiaridis/NurPhoto via Getty Images / Getty Images)

Netflix has spent the last year limiting account sharing, working to expand its ad business and changing its line-up of prices and plans to better position itself for future growth. It plans to stop providing investors quarterly membership numbers and the average revenue generated per member early next year because it now has multiple pricing tiers in a variety of markets, and will add annual revenue guidance.

Netflix ended the first quarter with 269.6 million paying customers globally and said it now has an audience of more than a half billion people.

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It delivered a stream of hit original TV shows early in the year, including science fiction epic "3 Body Problem," the latest season of reality series "Love is Blind," and TV drama "Griselda," as well as films like "Damsel" and lighter fare including "Irish Wish".

The streamer’s continued growth comes as competitors like Disney and Paramount push to make their streaming services profitable. While some traditional entertainment companies grapple with password-sharing crackdowns and improving their recommendation engines, Netflix is already benefiting from such product features.

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"We have built a hard to replicate combination of a strong slate, superior recommendations, broad reach and intense fandom," the company said in a letter to shareholders. Netflix said it must continue to improve the variety and quality of its programming as well as its product features and marketing.

The company’s shares have gained ground, rising about 30% year to date ahead of its earnings report. Shares fell more than 4% in after-market trading Thursday.

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Netflix’s subscriber growth through March was slower than the fourth quarter of last year, when it added 13.1 million subscribers, but remained robust, topping some Wall Street analyst forecasts. It expects net customer additions during the second quarter to be lower than the first quarter due to seasonality.

The Netflix logo is displayed at Netflix offices on July 19, 2023 in Los Angeles, California.  (Photo by Mario Tama/Getty Images / Getty Images)

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Netflix, Inc.

The company reported first-quarter revenue of $9.37 billion, up almost 15% from $8.16 billion a year earlier and ahead of its own projections for the period. Net profit rose nearly 80% to $2.33 billion in the quarter, beating the company’s forecast of nearly $2 billion.

Netflix said it must continue to improve the variety and quality of its programming as well as its product features and marketing.

The service is able to offer subscribers an increasingly diverse slate, from comfort watches featuring familiar shows and films from the past to flashy new releases. Netflix originals continue to appeal to subscribers, while the streamer’s rivals are now willing to license more hit shows and movies like "Gossip Girl" and "Young Sheldon" from their libraries.

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Netflix continues to push further into live events, livestreaming the annual Screen Actors Guild Awards this year and "The Netflix Slam," its first live tennis match featuring champions Rafael Nadal and Carlos Alcaraz. Earlier this year, Netflix announced a $5 billion, multiyear deal with WWE.

The company last month said it would livestream a boxing match between Mike Tyson and influencer-turned-boxer Jake Paul in July.