Netflix started charging for shared passwords. Would you have?
Netflix chose paid sharing in 2022. In Q2 2023 it added 5.89 million paid subscribers against a consensus of about 1.77 million, and revenue rose from $33.7 billion in 2023 to $39.0 billion in 2024.
Transcript
By 2023, 43% of Netflix members shared accounts. In 2022, Netflix had to decide what to do about it.
Option one: roll out paid sharing, market by market. Option two: keep letting passwords roam with zero friction. Which would you choose?
Netflix chose to charge. Its reasoning: it could not raise prices or sell ads against an audience where nearly half the seats were free.
The fear was a wave of cancellations. In its Q2 2023 shareholder letter, Netflix wrote: the cancel reaction was low.
Netflix added 5.89 million paid subscribers that quarter, against an analyst consensus of about 1.77 million. In Q4 2023, it added 13.1 million, its biggest fourth quarter ever.
Netflix revenue rose from $33.7 billion in 2023 to $39.0 billion in 2024.
The cancellations Netflix feared were smaller than expected. One service with strong content is not proof for every business. But before you protect a free habit, measure what it costs you.
The records behind this video
Every figure in the video comes from this Decision Record, each with its sources.
Run this decision
The Pricing Model Change Strategy Pack. “What does changing how you charge cost before it starts paying?” The framework, a model, a deck and the sourced cases, for running the same call on your own business. See the pack, $499 → Or start with the free guide to this decision →
