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Netflix Releases Details of Password-Sharing Crackdown

April 20, 2023

Amid a bullish show beating Wall Street earnings estimates for the first quarter, Netflix is demonstrating the challenges the mature streaming service faces in its pursuit of growth. The company said it shifted a wider launch of a plan to crack down on unsanctioned password sharing into the second quarter to make improvements, delaying some financial benefits, but said it was pleased with results so far.

As the streaming video pioneer faces signs of market saturation, it is looking for new ways to make money, such as the password crackdown and a new ad-supported service.

Earnings for the first quarter came in roughly in line with average analyst estimates

Revenue and earnings for the first quarter came in roughly in line with the average analyst estimates from Refinitiv. Earnings per share hit US$2.88 with revenue of $8.2-billion.

“We are growing and we are profitable,” co-CEO Ted Sarandos said in the company’s post-earnings video interview. “We have a clear path to accelerate growth in both revenue and profit, and we’re executing it.”

Shares of Netflix dropped as much as 11% in after-hours trade following the report but recovered to gain 1.4%.

Netflix serves as a bellwether for the streaming industry, in which growth has slowed as competition has intensified.

From January to March, Netflix added 1.75 million streaming subscribers, missing analyst estimates of 2.06 million additions. Analyst Paolo Pescatore of PP Foresight described the first-quarter results as mixed.

“Netflix is a mature business reinforcing less reliance on subscriber growth. However, this metric still moves the needle for key stakeholders,” he said.

The company began rolling out its solution for password-sharing — offering a “paid sharing” option — in 12 countries in February but is delaying expansion.

“We believe it will result in a better outcome for our members and our business,” the company said. Netflix also said it was “on track to meet our full-year 2023 financial objectives”.

The clampdown on password sharing will begin in the US during the current quarter, Netflix said.

A year ago, Netflix lost 200 000 subscribers — its first subscriber decline in more than a decade, sending its stock reeling and resetting Wall Street’s expectations for the sector.

Netflix added nearly nine million subscribers in 2022, half as many as the 18 million gained in the prior year, with much of that growth coming from Asia, notes research firm MoffettNathanson. The gains it made in Asia and Latin America have impacted the average revenue per user, spurring Netflix to make changes to its business model, the firm said.

The company introduced a lower-priced version of its service with ads in 12 countries in the fourth quarter.

UBS media analyst John Hodulik wrote that the password-sharing crackdown could well fuel Netflix’s nascent advertising business, as it drives these “sharers” to the lower-priced version of the service.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Netflix Takes a Beating as It Loses Huge Subscriber Base

April 20, 2022

Leading movie streaming site Netflix is losing customers for the first time in a decade, as it has resorted to throwing out all of its old rules. The streaming leader will introduce a cheaper, advertising-supported option for subscribers in the next couple years, and will start to crack down on people sharing their passwords even before that. Netflix also will curb its spending on films and TV shows in response to the customer losses.

Co-founder Reed Hastings has said for years that he doesn’t want to offer advertising and had no problems with password sharing. But the company is changing course after losing 200 000 customers in the first quarter, the first time it has shed subscribers since 2011. Netflix also projected it will shrink by another two million customers in the current second quarter, a huge setback for a company that regularly grew by 25 million subscribers or more a year.

By nudging customers to pay — and inserting advertising — Netflix begins to resemble what it replaced.

“It’s just shocking,” said analyst Michael Nathanson of MoffettNathanson. “Everything they’ve tried to convince me of over the last five years was given up in one quarter. It’s such an about face.”

Investors, analysts and Hollywood executives had been bracing for the company to report a sluggish start to the year, but Wall Street still expected Netflix to add 2.5 million customers in the first quarter. The shares, already down more than 40% this year, tumbled as much as 27% to $256 in after-hours trading.

Hastings and co-CEO Ted Sarandos had previously dismissed the company’s slowing subscriber sign-ups as a speed bump related to the pandemic, which had accelerated Netflix’s growth in 2020. But the company’s growth hasn’t returned to pre-pandemic levels.

Management pointed to four causes, including the prevalence of password sharing and growing competition. The company said there are more than 100 million households that use its service and don’t pay for it, on top of its 221.6 million subscribers. The Los Gatos, California-based company is experimenting with ways to sign up those viewers, such as asking people who are sharing someone else’s account to pay more.

“It allows us to bring in revenue for everyone who is viewing for gets value from entertainment we’re offering,” chief operating officer Greg Peters said during an interview with analyst Doug Anmuth of JPMorgan Chase & Co.

Netflix’s troubles are a warning sign for its peers and competitors. After watching millions of customers abandon pay TV for streaming, US entertainment giants merged and restructured to compete with Netflix. Investors encouraged this strategic shift, boosting shares of companies like Walt Disney Co that demonstrated a commitment to streaming.

Investors have begun to question whether some of these media companies will sign up enough customers to justify all the money they are spending on fresh programming. Disney fell as much as 5.2% in extended trading after Netflix reported its outlook, while Warner Bros’ Discovery, the owner of HBO Max, declined as much as 2.8%. Shares of Roku, the maker of set-top boxes for streaming, dropped as much as 8.3%.

All of these competitors offer advertising-supported services, or are planning to do so in the near future. Analysts and competitors have speculated that Netflix would offer advertising for years, only to be rejected by Hastings. Netflix always said its viewers preferred its service over cable TV because there were no ads. Hastings also didn’t want to compete with Google and Facebook in selling ads online. Yet he has finally relented.

“Allowing consumers who would like to have lower price and are ad tolerant makes a lot of sense,” Hastings said on Tuesday. Netflix will explore the best way to offer advertising over the next couple of years.

Cracking down on password sharing is a risk for a company that started by giving customers a cheaper, more convenient alternative to cable. By nudging customers to pay — and inserting advertising — Netflix begins to resemble what it replaced.

But the company needs help after losing customers in three of its four regions in the first quarter, including more than 600 000 in the US and Canada. Netflix blamed most of that on a price increase, and said the decline was expected. Russia’s invasion of Ukraine cost the company another 700 000 customers when it had to pull its service in Russia, resulting in a loss of 300 000 customers in the Europe, Middle East and Africa.

Overall, Netflix had forecast subscribers would grow by 2.5 million in the first quarter, roughly in line with Wall Street estimates. For the current period, analysts were predicting gains of 2.43 million. First quarter revenue grew 9.8% to US$7.87-billion, missing analysts’ estimates. Profit, at $3.53/share, easily topped projections of $2.91.

“They were never able to explain why or how growth was slowing,” Nathanson said. “Now they’ve decided growth is slowing. How did this change in two quarters?”

Asia was the lone bright spot. Netflix added more than a million customers in the region, buoyed by popular new titles such as the South Korean drama All of Us Are Dead.

Netflix remains well ahead of most of its competitors outside the US, and is the largest streaming service in the world. The company believes it can execute its way out of the current predicament by luring new customers with better programmes and finding more ways to charge its existing user base. The company still expects to add customers this year, and will have a stronger slate of new shows in the back half of the year.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Netflix Plans R900-Million Investment Into South African Productions

March 27, 2022

Video giant Netflix has made known plans aimed at boosting its production base in South Africa with about 900 million rands investment in the country. Netflix made this known at the fourth annual South African Investment Conference in Sandton adding that the new investment will go into local content production over the next two years.

This commitment will cover four productions — one international and three local — which will be filmed in South Africa during 2022 and 2023, the company said.

Shola Sanni, Netflix’s director of public policy in sub-Saharan Africa

“These productions, which are just some of the many shows the company is creating in South Africa with local production partners like Film Afrika, Gambit Films, Quizzical Pictures and Burnt Onion, will significantly boost the South African film and TV industry,” Netflix said in a statement.

“South Africa is fast becoming a top global location for Netflix productions, with the country viewed as a go-to location with a robust and talented film industry filled with local creatives to bring international stories to life,” it said.

Since our launch [in South Africa] in 2016, we’ve been working with creators and distributors to bring high-quality stories that showcase the best of the country’s creativity and talent to a global audience — and this is only the beginning,” said Shola Sanni, Netflix’s director of public policy in sub-Saharan Africa, in the statement.

The economic impact of each of the projects in South Africa is several times greater than the actual money invested, Netflix said.

Over the last five years, Netflix invested about R2-billion on South African productions. In 2021, the company estimated that for every one local view of a South African title on Netflix, there were 26 views by households outside South Africa.

The company said favourable investment incentives by the government have attracted Netflix to South Africa.

“We are keen to see the government continue to maintain the favourable investment environment that has allowed for such investments thus far, including remarkable initiatives like the foreign film and production incentive scheme that the department of trade, industry & competition has operated, which is in partly responsible for putting South Africa at the front of the line as an attractive investment destination for production companies,” said Sanni in the statement.

“It would be great for our long-term investment plans to see even more transparency and predictability in that area, because the presence of a reliable incentive scheme is crucial for our financial decisions.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Netflix to Introduce New Test to Curb Password Sharing

March 14, 2021

As the need for platforms to protect the security of subscribers gain momentum following a series of breaches in recent times, global video streaming platform Netflix is testing ways to curb password sharing for business and security reasons. As part of this test, users will be required to verify whether or not they are the owner of the account through an email code or text code. “If someone is unable to verify account ownership within a certain timeframe, they won’t be able to stream any Netflix content,” sources from the company say.

According to Netflix’s terms, an account can only be shared with people of the same household, “the Netflix service and any content viewed through our service are for your personal and non-commercial use only and may not be shared with individuals beyond your household.”

A Netflix spokesperson told The Verge, “the test is designed to help ensure that people using Netflix accounts are authorized to do so”. And up until now, the company has done nothing to police this except to set limits on simultaneous streaming.

In another development, Netflix has launched a new short-form video platform called Fast Laughs. The service is expected to give users an inside look at funny clips from Netflix’s library of series. “Wanna see something funny? On Netflix, this one little question opens up lots of possibilities from hilarious series and films to laugh-out-loud stand-up specials,” reads a statement from the company.

“That’s why we’re launching a new Fast Laughs feature for mobile devices. Fast Laughs offers a full-screen feed of funny clips from our big comedy catalogue including films (Murder Mystery), series (Big Mouth), sitcoms (The Crew) and stand-up from comedians like Kevin Hart and Ali Wong.”

Users can access the service through the bottom navigation menu by clicking on the Fast Laughs tab. Clips will start playing – when one ends another begins. Users can also share the clips individually on Whatsapp, Instagram, Snapchat and Twitter. Fast Laughs is available now for iPhone users in select countries, and it will be testing on Android soon.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Netflix Taps Ebi Atawodi as Director of Payments for the EMEA Region

February 15, 2021

Global movie streaming outfit Netflix has named Ebi Atawodi to lead its payments in Europe, Middle East and Africa region. This is coming on the heels of her spearheading Uber’s arrival and growth in West Africa, six years at Uber which she described as “a ride of a lifetime.” Atawodi was general manager at Uber with responsibilities spanning the cab-hailing platform’s expansion in Lagos and other West African cities. One milestone was in March 2016 when Abuja, Nigeria’s federal capital, became Uber’s 400th city.

After being on the ground and leading those operations, Atawodi became Uber’s Head of Product (payments) in February 2017. While she now switches from the ride-sharing and logistics industry to entertainment, her focus remains on payments.

“Anyone who knows me knows I’m obsessed with Netflix – the culture, the product, the impact it has had on the art of storytelling. Excited to be joining Netflix as Director of Payments, [Europe, the Middle East and Africa] and can’t wait to do the ‘best work of my life’,” Atawodi wrote on her LinkdIn page.

With an estimated 66.7 million Netflix subscribers from the EMEA region, prospects of growth are enormous. Netflix’s EMEA subscribers are expected to surpass those in North America in about two years, according to The Motley Fool. Netflix launched in Africa in 2016. Recently, the streaming giant has been exploring mobile-only subscription plans to take advantage of the growth in smartphone and internet penetration. They started testing “Mobile” and “Mobile+” plans in Egypt in 2018 and South Africa in 2019. The plans will be priced at $2.30 and $3.50 per month, respectively.

Netflix added 8.5 million new subscribers in the last quarter of 2020, riding the pandemic’s work-from-home and lockdown wave. The company ended 2020 with over 200 million paying subscribers. No other streaming platform in the world has as many users.

Atawodi will oversee these payment dynamics to keep Netflix ahead of shrewd competitors in Africa’s streaming video on-demand market, especially Showmax. The Multichoice-owned service has been working to dominate the market by offering on-demand video streaming and live TV including football matches, music and news.

Before joining Uber in 2014, Atawodi worked at Etisalat, the Nigerian telecommunications company that transitioned into 9Mobile, as their head of Corporate Communications and sponsorships. In that role, she says she was involved in Etisalat’s partnerships with the Nigeria Communications Commission to enable users to port their numbers between telecom providers.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Critics Slam Plans for Netflix and DStv to collect TV license fees in South Africa

October 26, 2020

Deputy Communications Minister Pinky Kekana

Media critics have come hard on South African authorities over the plan by the South African Broadcasting Corporation’s (SABC) to ask Netflix and MultiChoice to collect TV license fees as unrealistic. This came as the Deputy Communications Minister Pinky Kekana has recently said the expanded definition of a TV licence is outdated and needs to be adjusted to current realities. The SABC said regulation is needed which would require service providers like MultiChoice (DStv) and Netflix to collect TV licences on behalf of the SABC.

Kekana said the government’s proposal to help the SABC improve its financial position would include allowing the public broadcaster to collect licence fees from non-TV users. She added that TV licences fees should not be limited to TVs, but should also include devices like laptops and smartphones which are used to consume content. This idea has been slated by technology experts are unrealistic and challenging to enforce. Rain founder and venture capitalist Michael Jordaan said every business would love to have their competitors pay them, but that’s not how competition works.

“You have to constantly improve to stay relevant,” Jordaan said about the SABC’s funding challenges. Stuff Magazine Editor Toby Shapshak said it is a “crazy suggestion” to expect Netflix or Amazon Prime to collect TV licence fees. He highlighted that there are many problems with the proposal, like who is going to charge the TV licence fee.

“I subscribe to Netflix, DStv, Showmax, and Amazon Prime. Which one of these four companies are going to charge the TV licence fee?” he asked.

“How are they going to cooperate with each other, and what if all of them are charging me the fee?”

Organisation Undoing Tax Abuse (Outa) CEO Wayne Duvenage said the TV License model is failing. “Any tax or levy that fails to achieve the required compliance due to poor administration and is unenforceable should be terminated,” he said.

Duvenage said TV Licenses have become an irrational tax and compliance has declined over the past decade. “This ultimately means that the revenue model for the state broadcaster should be reviewed, as must its business model and cost structures,” he said.

“We understand the need for a public broadcaster and that some of its funding will need to be sourced through levies or general tax allocations. The question is how much and why and where does oversight of this lie?”

He said the best outcome would be for the SABC to become financially viable as a broadcaster of choice and not of necessity. The idea of switching the failed TV License revenue mechanism to other commercial broadcasters or live streaming entities, or to add a tax to the sale of electronic devices like laptops, phones, and laptops, is also not a solution in Outa’s view.

“This has other unintended consequences and interferes with these entities’ sensitive pricing models,” he said.

“In addition, these items are already taxed through business taxes, VAT and import duties, so by adding a tax onto these electronic items to pay for the public broadcaster would essentially be a double taxation.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Netflix Partners With Telecom Operators Across Africa To Drive Growth

October 23, 2020

After the broadcast of additional local content and the establishment of an exclusively mobile offer, Netflix has a new idea to ensure its development in Africa. The American streaming giant has initiated a series of partnerships with telecom operators on the continent. Its goal is to simplify payments for potential new subscribers.

The announcement was made ahead of the presentation of the company’s quarterly results. It shows all its determination and her interest in the African continent.

50+ Netflix Statistics, Facts and Figures (2020 Version) | Comparitech

Netflix Africa

Through these partnerships, subscribers of telecommunications companies will be able to add the Netflix subscription to their bill. The American company has already concluded agreements with Vodacom and Telkom South Africa. To cope with the high speed of high-speed internet, it is considering allowing downloads over Wi-Fi for viewing outside the internet.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer