Netflix will launch a paid password-sharing system by June 2023, after its members achieved a record high of 232.5 million in the first quarter of 2023, confirming the widely held belief that the leading streaming behemoth had finally broken the post-pandemic trend of low subscriber growth rate.
The startup, based in Los Gatos, California, announced on Tuesday that its ad-supported version is delivering critical early results in line with its objectives. The streaming television behemoth announced a $1.3 billion quarterly profit. The firm has postponed its much-anticipated crack down on password sharing “to improve the experience for members.”
Crackdown on Netflix password sharing: What is a paid password sharing system?
Netflix stated that it aims to begin offering paid password-sharing alternatives in the current quarter, or before June 2023. A premium password-sharing scheme would require members to pay additional membership fees for seeing Netflix material beyond a certain number of accounts.
“We believe this will result in a better outcome for both our members and our business,” stated Netflix.
At the same time, Netflix is testing a new ad-supported subscription tier. Netflix also stated that there has been “very little switching from our standard and premium plans.”
Insider Intelligence predicts that Netflix’s new tier will generate $770 million in ad income this year, and that amount will exceed $1 billion next year.
As Netflix’s subscriber growth halted last year, the firm began focusing on developing a lower-cost subscription tier with advertising.
Meanwhile, Insider Intelligence predicts that for the first time ever, US consumers will spend more time this year watching digital video on platforms such as Netflix, TikTok, and YouTube than watching traditional television.
According to the market research firm, “linear TV” will account for less than half of daily viewing for the first time ever, dropping to less than three hours, while average daily digital video consumption will increase to 52.3 percent with 3 hours and 11 minutes.
“This milestone is driven by people spending more and more time watching video on their biggest and smallest screens, whether it’s an immersive drama on a connected TV or a viral clip on a smartphone,” Insider Intelligence principal analyst Paul Verna said in a release.