After a challenging post-covid phase marked by subscription losses that impacted revenues and its reputation as a consistent generator of growth, Netflix has daringly implemented two significant (if controversial) strategic maneuvers to considerable success, emerging as one of the stand-out performers of 2023. The first initiative put an end to account sharing. Though some observers initially dismissed the announcement as an empty threat or even a misstep, data from occam suggests the initiative is likely accretive to BOTH subscriptions and Average Revenue per Membership (ARM). The second initiative introduced an ad-supported subscription tier. Thus far, the plan has shown to be an effective churn reducer and incremental on-ramp to price sensitive consumers. Below, we reveal how both maneuvers are growing Netflix revenues and expanding its prized subscriber base.
Since Netflix went live with its password crackdown on May 23, an increasing number of account owners have stopped sharing their accounts.
*According to Netflix, ARM is calculated by “dividing streaming revenue by the average number of streaming paid memberships by the number of months in the period.” Extra member accounts (borrowers) are not included in the count of paid memberships in the denominator but the $7.99 fee is added in the numerator as extra revenue.
*Current Basic subscribers are grandfathered in.
*Excluding ~8% of respondents that answered “Other”
Source: Analysis based on occam™ proprietary AI-enhanced research platform with various data sources, including a wide range of questions asked to over 1000 respondents per day with over three years of history. Information is census-balanced and uses occam’s™ proprietary AI algorithm that ensures minimal sampling bias (<1%). Contact us for more info.