TV-streaming company Netflix posted a mixed quarterly financial report this week, as it pushed back the rollout of its new password-sharing crackdown initiative.
Netflix originally said the rollout, which will make it much tougher for users to share their passwords with others, would take place in the first quarter, but the company now says it will happen in the second quarter.
“While this means that some of the expected membership growth and revenue benefit will fall in Q3 rather than Q2, we believe this will result in a better outcome from both our members and our business,” Netflix said in its earnings release.
The crackdown has already begun in some international markets, and Netflix says it has seen increased subscriber growth in those territories.
For the first quarter of the year, Netflix posted earnings of $1.31 billion or $2.88 per share, down from $1.6 billion or $3.53 per share for the same period last year. Revenue grew from $7.87 billion in Q1 2022 to $8.16 billion this year. Shares of the company fell more than 10% on the earnings report on Tuesday, but mostly recovered those losses in after hours trading.
Netflix introduced its password-sharing guidance in four countries in February. In New Zealand, Canada, Portugal and Spain the company said it would ask users to set a “primary location” for their accounts and then prompt them to establish two “sub accounts” for those who don’t live at that home address, for an extra fee.
The company said it initially saw cancellations in some regions following the news of the crackdown, which affected near-term growth. But it now says revenue is increasing as a result.
Netflix also closed down its DVD mailing business on Tuesday— its original offering where it mailed discs in red envelopes to customers.