How Netflix's ban on password sharing and ad push has worked big time

Netflix just wrapped up its third quarter earnings call, and it had Wall Street analysts on the edge of their seats. The streamer added around 5 million subscribers in the third quarter of 2024, bringing its total global count to 282.7 million. Approximately half of new sign-ups opted for the ad-supported plan , indicating that Netflix's recent strategies have started to pay off significantly.

Ted Sarandos , Netflix's co-CEO, expressed satisfaction with the results during the earnings call. "Our plan to reaccelerate our business has delivered," he stated. Netflix reported $9.83 billion in revenue and $2.91 billion in operating income.

Netflix turns freeloaders to paying customers
The crackdown on password sharing seemingly paid off big time, driving subscriber growth and revenue. Over the past year, the streaming giant implemented strict measures to prevent users from sharing their account credentials with individuals outside their household. This move, which initially faced some backlash from users, required people to either pay for their own subscription or add extra members to their account for an additional fee.

While the company didn't provide specific numbers on how many of these new subscribers were former password sharers, the surge in overall subscriber growth suggests that the crackdown has effectively pushed many freeloaders to become legitimate users.

Ad-supported tier gains traction
The ad-supported tier, launched in late 2022, has also become a significant driver of growth. Netflix reported that ad-supported memberships increased by 35% quarter-over-quarter. The company also saw a 150% increase in upfront ad sales commitments compared to the previous year, indicating growing advertiser interest in the platform.

Netflix says that it plans to test an in-house ad tech platform in Canada later this year, with plans for a wider rollout in 2025. This would give the streamer more control over its advertising ecosystem and potentially increase its ad revenue.

Netflix's growth was particularly strong in the Europe, Middle East, and Africa (EMEA) region, as well as in Asia-Pacific. However, the company reported a slight decline in subscribers in Latin America, its first drop in the region since early 2023.

Netflix still recovering from the Hollywood strike
Despite the positive financial results, Netflix acknowledged some challenges in its content pipeline. The company described its 2024 programming as "patchier than normal" due to the impact of last year's Hollywood strikes . However, Netflix assured investors that production has picked up again and expects programming to return to normal state next year

Some of the titles that raked in the highest viewerships in the Q3 included "The Perfect Couple" and a new season of "Emily in Paris," which helped drive engagement. Netflix also teased a strong Q4 lineup, including the return of "Squid Game."

Netflix says that the average subscriber spends two hours per day on the platform.

In addition to its traditional streaming offerings, Netflix is making significant strides into live content. The streamer is expanding into live programming , with plans to stream WWE's "Monday Night Raw" next year and the upcoming Mike Tyson vs. Jake Paul boxing match.