According to Hungarian time, Netflix published its quick report for the third quarter on Tuesday evening, and the company’s management made some significant announcements that affected many. One of them was already known a few days ago, but this time it was taken up again: from November, a version of the streaming service that offers a cheaper subscription, but offers ads in return, will be launched in 12 countries. (This service will not be available in Hungary yet.)
Netflix has been battling for some time what is essentially illegal password sharing (a subscriber can now create five user accounts, which means many people share their passwords with their relatives and friends). The company’s management has just revealed the details of its plan to limit this, but the idea does not seem revolutionary: those whose subscriptions are now also used by others will be offered the option to create sub-accounts, which will be accompanied by a little more. An expensive subscription compared to the current one – but allowing that will make more people use the service. Those who now have Netflix with another account are offered that if they subscribe, they can move the current user profile to their own subscription.
The scale of the password-sharing problem is illustrated by the fact that while it had approximately 220 million subscribers, it was estimated that they had nearly half that number, and about 100 million non-subscriber viewers using other people’s passwords. The tightening is set to begin next year, but no more precise details have been announced yet.
The number of the company’s subscribers increased even without implementing these measures in the last quarter (mainly thanks to the Asian region): between July and September, the number of users increased by 2.4 million. This is more than double what the company’s management and analysts expected. At the same time, Netflix still feels that its growth is not dynamic enough – planned actions can help accelerate this. The company recently announced the number of new subscribers it expects from next quarter — which ones we’re already in — the 4.5 million forecast may already include the impact of the cheaper “advertised” package.
Not only did the number of subscribers increase, but the company’s revenue increased more than expected: In the third quarter, the streaming service provider earned nearly $8 billion, a 5.9 percent increase over the previous year. Earnings per share were nearly one and a half times what analysts had expected ($3.1 versus $2.13), so the company’s shares were up 14 percent in after-hours trading (however, their value was still half what they were at the beginning of the year).
