Netflix’s historically lax attitude towards password sharing by its users helped the company gain the position it has as the world’s most popular video streamer. But this year it started cracking down on the practice, in the hope that doing so would reverse a recent drop in subscriber numbers.
At first, it looked like the move could have been a misfire. Within Spain alone, Netflix lost a million users in three months after its crackdown began there—Canada, New Zealand, and Portugal were also early targets. However, the company stuck to its guns, extending the restrictions to around 100 more countries, including the U.S., in May. And yesterday, the results came in.
Netflix’s Q2 revenues may have disappointed Wall Street, leading to a share-price drop of nearly 8%, but with Q2 subscriber growth (5.9 million) coming in at nearly three times analyst estimates, it’s clear Netflix is doing something right. The password crackdown appears to have paid off—though as tech news site Techdirt points out, that’s not entirely clear—aided by Netflix’s introduction of a cheaper, ad-supported tier and an option for paying a surcharge to let someone living outside your household share the account.
“The cancel reaction was low and while we’re still in the early stages of monetization, we’re seeing healthy conversion of borrower households into full paying Netflix memberships as well as the uptake of our extra member feature,” Netflix said in a shareholder letter yesterday.
In the letter, Netflix also said it was now turning its attention to the rest of the markets in which it operates, most notably India. However, it’s not giving people in these markets the option to add others to their account for an additional fee, because “we’ve recently cut prices in a good number of these countries (for example, Indonesia, Croatia, Kenya, and India) and penetration is still relatively low in many of them so we have plenty of runway without creating additional complexity.”
It should be noted that there are some countries caught up in this final wave in which Netflix hasn’t recently cut prices, such as South Africa, and it will be particularly interesting to see how the crackdown affects user numbers there. But either way, the password-sharing shift’s final phase is now underway.
Oh, and bad news for anyone who was just about to sign up for Netflix’s $10 Basic plan, the cheapest tier without ads—it’s toast, though those who are already on it can stay on it. More news below.
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David Meyer
NEWSWORTHY
TikTok plays nice with researchers. TikTok has expanded its already-available-in-the-U.S. Research application programming interface (API) to Europe, to comply in advance with the EU’s new Digital Services Act, which imposes a tough set of rules on major online content services. The move allows researchers to evaluate the platform and its content. TikTok has now also upgraded the API so researchers can collaboratively gain access to its systems, and opened up its Commercial Content Library to provide transparency into its ads.
Google pitches to publishers. Google is developing an A.I.-powered tool for journalists. It’s been pitching the “Genesis” assistant to executives at News Corp, the Washington Post, and the New York Times, according to the Times, which failed to get a comment from itself. “Some executives who saw Google’s pitch described it as unsettling,” the report notes. “Two people said it seemed to take for granted the effort that went into producing accurate and artful news stories.”
Amazon reads more palms. Amazon is expanding its rollout of palm-reading technology to all of its Whole Foods Market locations, currently just for payments. As TechCrunch notes, the company is also planning to use its biometric readers for age verification, for alcohol purchases.
ON OUR FEED
“Both Heaven and Hell have hopefully installed two-factor authentication.”
—Internet archivist Jason Scott salutes the legendary hacker and cybersecurity consultant Kevin Mitnick, who was taken by pancreatic cancer on Sunday at the age of 59. Mitnick served a total of six years in prison for crimes such as stealing software from Digital Equipment Corp and hacking into Pacific Bell’s voicemail system. The severity of his punishment became a cause célèbre in the tech world. After his release in 2000, Mitnick became a leading “white hat” hacker and teacher of social engineering.
IN CASE YOU MISSED IT
Apple added $71 billion to its market value after news that it’s been secretly building an ‘Apple GPT’ to rival OpenAI, by Chloe Taylor
Microsoft will feast on $14 billion in new revenue every year if just 10% of Office users sign on for its A.I.-powered CoPilot—Macquarie report, by Stephen Pastis
Elon Musk says Tesla will spend $1 billion to build a ‘Dojo’ A.I. supercomputer—but it wouldn’t be necessary if Nvidia could just supply more chips, by Christiaan Hetzner
Gen Zers are using apps like Remini and Canva to turn selfies into A.I.-generated professional headshots while saving big money, by Paige Hagy
Turns out Threads really is like Twitter. Meta’s new app just limited the number of posts users can see after Elon Musk’s Twitter did the same, by Paolo Confino
Netflix predicts it’ll be swimming in an extra $1.5 billion in cash due to the Hollywood writers’ strike—but trouble could lie ahead, by Eleanor Pringle
BEFORE YOU GO
The spy who loved A.I. Sir Richard Moore, the head of the U.K.’s Secret Intelligence Service (more commonly known as MI6) gave an interesting interview to Politico yesterday. Towards the end, he addressed how his agency was thinking about using A.I. in the future. (Side note: Time Out also reported yesterday that MI6 is scouting around for an “A.I. Research Lead”.) One obvious use case was to help MI6 “sift through data and find people who might help us,” Moore said, but:
“Far more important to me is there’s absolutely no doubt that some of our adversaries will be prepared to develop A.I. in ways which are reckless and dangerous…That worries us and therefore it will be a significant part of our role going into the future to try and detect, uncover, and then disrupt people who would like to develop A.I. in directions which are dangerous for us.”
“It’s very important that we work to preserve human agency over the technologies we are developing, and not all actors out there may approach this with the same responsibility that we in the U.K. do,” Moore added. So just in case A.I. does turn out to be an apocalyptic mess, at least James Bond will be on the case.
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