Netflix has experienced a slowdown in subscriber growth following its crackdown on password sharing, which now restricts account sharing to people in the same household. While the platform continues to expand, the rate of new subscriber additions has declined in recent quarters, potentially due to these anti-sharing measures.
Subscriber Growth and Revenue Trends
According to Reuters, data from LSEG shows that Netflix's growth has decelerated since the first quarter of 2024. In the second quarter, Netflix gained 4.82 million subscribers, marking the lowest increase since the first quarter of 2023. For comparison, Netflix added nearly 15 million subscribers in the fourth quarter of 2023.
Despite the slower subscriber growth, Netflix has seen a significant increase in ad revenue. The company's emphasis on its most affordable ad-supported plan, priced at $6.99 per month in the US, has contributed to this boost. Earlier this month, Netflix discontinued its cheapest ad-free plan, which was $11.99 per month. Users now need to upgrade to the Standard plan, costing $15.49 per month, to avoid ads, while the 4K ad-free plan is priced at $22.99 per month.
LSEG estimates that Netflix's ad revenue more than doubled in the June quarter, reaching $9.53 billion – the highest growth since the second quarter of 2021.
Industry-Wide Shift Towards Ad-Supported Plans
Netflix is not alone in shifting towards ad-supported subscription models. Disney+ introduced a cheaper ad-based plan in 2022 and has also begun enforcing password sharing restrictions this year. Rumors suggest that Apple TV+ is considering launching an ad-supported plan as well. Recently, Apple TV+ raised its subscription price from $6.99 per month to $9.99 per month in the US.
In the last quarter, Apple TV+ surpassed Paramount+ in US streaming market share and is now approaching the market shares of Hulu and Disney+.
Netflix’s strategy reflects a broader industry trend towards ad-based plans, as streaming platforms seek to balance subscriber growth with revenue generation.