Inside Netflix: New plans, new factors for subscriber growth
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While investors who drove Netflix stock (NASDAQ:NFLX) lower off the company's second-quarter earnings seemed to focus on revenues and guidance that missed the mark, the streamer topped subscriber-growth estimates -- a notable result as the company went full bore on cracking down on users sharing their passwords with nonpaying friends and family.
Netflix shares (NFLX) were down 9% early Thursday in response to the report.
Netflix (NFLX) had previously estimated that 100M users worldwide were viewing off shared passwords to the service, setting up an opportunity to tap a new stream of revenue by shuffling at least some of those riders onto lower-priced (but extra-revenue) "guest" accounts -- or, making it easier for them to move their viewing profile into their own paid individual account.
As Netflix (NFLX) weighed the move over the past year, there was early doubt about how or whether a password crackdown would affect overall subscriber growth -- a metric that took a notable hit with its first ever declines in the first half of 2022.

Netflix (NFLX) has shown some recent relative strength in holiday-season additions, with big gains in the fourth quarter each of the past two years. But this second-quarter report, where the company added a net 5.89M subs worldwide, was unusually strong compared to recent Q2 numbers.
The company's leadership team suggests that ship has been righted, after saying in recent quarters that it was a priority to fix the early-2022 sub growth decline.
And while the company's new revenue mix has spurred Netflix execs to stop giving forecasts for subscriber counts, they still hint at the connection when they say they expect revenue growth to accelerate later this year.
"So most of our revenue growth this year is some growth in volume through new paid memberships, and that's largely driven by our paid sharing rollout," Chief Financial Officer Spence Neumann said in the company's Q2 earnings interview. "It is our primary revenue accelerator in the year, and we expect that impact ... to build over several quarters."
In other account changes, this week the company followed through on a signal that it was de-emphasizing its lowest-price ad-free service plan, removing its "Basic" tier for offer in the U.S. and UK. It had previously (and quietly) stopped offering the lowest-level plan in Canada, a C$9.99/month offering, instead urging new subscribers toward either its mid-priced ad-free plan or a cheaper ad-supported tier.
Removing that plan in the U.S. and UK will have a similar effect, pushing users to either bump up to the Standard plan or select the ad-supported plan (for which Netflix says the average-revenue numbers are working out positively).
More on Netflix earnings

Netflix sells off on weak Q2, guidance, Wall Street defends for 'patient' investors
Netflix earnings call: Paid sharing key to ramping revenues in 2023
Netflix dips as revenues miss, profits and subscribers beat forecasts
Netflix GAAP EPS of $3.29 beats by $0.44, revenue of $8.19B misses by $100M