Netflix's password-sharing crackdown yields dividends

Netflix's tightening of password-sharing among users has led to a surge in new sign-ups, with viewers opting to pay lest they miss out on the next big streaming thing.

Why it matters: Until just recently, Netflix password sharing was de rigueur among users. But the streaming giant raised eyebrows this year by enforcing — then expanding — a policy designed to dramatically limit the ability of family, friends and even former paramours to use a single login.

Driving the news: On Friday, analytics firm Antenna released data that showed a massive jump in U.S. user acquisition in the immediate aftermath of Netflix alerting U.S. subscribers last month that it would begin curbing shared passwords.

• Netflix saw close to 100,000 daily sign-ups on May 26 and May 27, Antenna shared in a blog post.
• "Average daily Sign-ups to Netflix reached 73k during that period, a +102% increase from the prior 60-day average. These exceed the spikes in Sign-ups Antenna observed during the initial U.S. Covid-19 lockdowns in March and April 2020."

Some Netflix subscribers opted to cancel, but those numbers were swamped by new sign-ups, Antenna noted.

What they're saying: In its first-quarter earnings report, Netflix itself predicted that the crackdown would create a halo effect on sign-ups and revenue.

• "Paid sharing is another important initiative as widespread account sharing (100M+ households) undermines our ability to invest in and improve Netflix for our paying members, as well as build our business," it said in a shareholder letter.
• "But as borrowers start to activate their own accounts and existing members add 'extra member' accounts, we see increased acquisition and revenue."