Delayed password sharing crackdown in the U.S. leads to Netflix budget cuts

Increased revenue is expected when the crackdown hits the U.S.

Netflix will cut spending by $300 million dollars USD (about $407 million CAD) this year. In its first quarter of 2023, Netflix expected to gain 2.06 million subscribers, but only added 1.75 million. Its earnings for the first quarter of 2023 were $1.31 billion USD (about $1.75 billion CAD), compared to $1.6 billion USD (roughly $2.14 billion CAD) in earnings during the first quarter of 2022.

The Wall Street Journal reported that cutting costs is needed because Netflix’s plans to crack down on password sharing were pushed back in the United States.

Netflix announced a few months ago that users would no longer be able to share passwords with one another, causing more than half of Ontarians to plan on cancelling their accounts. Canada, New Zealand, Portugal, and Spain all had password sharing banned in February.

It became a system where extra users need to pay a monthly fee or subscribe separately, though not everyone in Canada has been kicked off of their friends’ or families’ accounts. Regardless, Netflix said it saw subscriber growth in the Canadian market.

In the United States and some other places, however, the change was delayed until the second quarter of the year. This cost Netflix the revenue it had expected to receive by making users create their own accounts or pay to stay on their current ones. Americans will face the password crackdown this summer, which is expected to increase revenue.

At the same time, Netflix cut the cost for customers in other countries, including Kenya, Croatia, Venezuela, and the Philippines.

Last year, Netflix’s operating budget was $26 billion USD (about $35 billion CAD). This cut is equal to 1.15 percent of that amount.

Source: The Wall Street Journal Via: Tech Crunch