Netflix Subscriptions Jump as U.S. Password-Sharing Crackdown Begins

According to streaming analytics company Antenna, the streaming giant amassed more new subscriptions in the U.S. between May 25 and 28, shortly after Netflix notified users of the limits, than in any other four-day period since Antenna began compiling such data in 2019.

The change, which is upending years-long password-sharing arrangements between families and friends, is critical to Netflix’s growth: The streaming giant and its rivals are struggling to bring in new subscribers, particularly in the U.S. market, where consumers can choose from a range of services that are easy to turn on and off.

Netflix has said more than 100 million people around the world watch its content using borrowed passwords.

The password-sharing crackdown, which started going into effect in the U.S. and more than 100 countries and territories on May 23, forced users who share an account outside the same home to pay an additional $7.99 a month to watch. It also limited the number of extra members customers could add to their account, depending on the tier of service they pay for.

The monthly cost of sharing with an extra person is $2 less a month than a basic subscription, and $1 more than the ad-supported plan, which Netflix introduced late last year in another effort to boost revenue and appeal to price-conscious customers.

Shares of Netflix have risen about 16% since the password-sharing crackdown started going into effect on May 23.

Antenna uses third-party services that collect consumer information, with permission, from sources including online purchase receipts, bills and banking records, and its data don’t include subscriptions offered through bundles. A Netflix spokeswoman declined to comment.

Netflix has already rolled out password-sharing restrictions outside the U.S. in countries including Canada, Spain, Portugal and New Zealand.

Customers in countries where it first limited account-sharing initially balked at its campaign, but many ultimately paid for their own accounts in order to watch hit content, the company has said.

In Canada, for example, Netflix’s paid membership base was larger after its password-sharing limits were rolled out than they were before it, and revenue is growing faster there than in the U.S., the company said in an April shareholder letter.

Netflix last year had two consecutive quarters of subscriber losses for the first time in its history. Its subscriber base started growing again over the past few quarters, but at a much slower pace than during the early days of the pandemic. The company has delayed its initiative to crack down on password-sharing for years, though Netflix’s internal researchers had identified it has a major problem in 2019, The Wall Street Journal previously reported.

The sharing of accounts “undermines our ability to invest in and improve Netflix for our paying members, as well as build our business," the company said in its first-quarter shareholder letter.

The company is in the throes of two major and related strategic shifts: password-sharing crackdowns and a relatively new advertising model. In limiting password sharing, it hopes to drive more viewers who were using someone else’s account to pay for their own subscriptions.

Late last year, Netflix launched its $6.99 ad-supported tier of service in the U.S. and several other countries that offers consumers a lower price in exchange for viewing ads. Those customers deliver more revenue per member than its basic and standard plans, because Netflix makes money from the ads as well as the monthly subscription fee.

Write to Isabella Simonetti at isabella.simonetti@wsj.com