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The streaming crackdown on password sharing could be a win for advertisers

A hand holds a suitcase with a centered microchip radiating signals across circuitry.

Illustration by Dave Cole / Getty / The Current

Netflix’s password-sharing crackdown seems to be paying off, so much so that Disney CEO Bob Iger recently said that his company is also “actively exploring ways to address account sharing” on its streaming platforms.

The initiatives could encourage new customers who had previously been using someone else’s account to sign up for less expensive ad-supported tiers, providing improved data to advertisers for better-informed media plans that can reach the individual subscriber.

“These streamers know how many subscribers they have, but what advertisers are looking for is how many viewers they have,” says Video Advertising Bureau Executive Vice President Danielle DeLauro. “A lot of times those are completely different numbers.”

The initiatives come at a time when media companies are looking to boost streaming revenue, and one way to do so is by monetizing the hundreds of consumers who watch content using someone else's account. Netflix has estimated that 100 million people around the world were using its service without paying for it, for instance. Another revenue stream is advertising.

“Since there’s been a movement toward an advertising revenue stream, streamers are looking to monetize every single subscriber,” DeLauro says. “And the way to monetize that through advertising is through count. Streamers want to make sure they’re counting every single person correctly, and that they’re taking that count and giving it back to advertisers.”

Now advertisers have more opportunities to reach specific audience segments on Netflix (and soon, Disney platforms), align their creative messaging with the right audience, and potentially retarget those people, according to DeLauro.

Netflix added nearly 6 million subscribers in the second quarter, suggesting its crackdown has been effective in attracting new customers who may have been kicked off someone else’s account. The company introduced the initiative in the U.S. and other territories earlier this year, saying it would charge subscribers an extra $8 per month to add someone from outside their household to their account.

Antenna, an analytics firm that measures subscriptions, said in June after the initiative launched that Netflix “had the four single largest days of U.S. user acquisition” since Antenna started measuring Netflix four and a half years ago. Then, Antenna found that 23 percent of U.S. Netflix sign-ups in July were to the ad plan, up four percentage points from June, “and the highest portion of sign-ups since the launch of that plan in November.”

“An ad-supported tier is a happy medium,” DeLauro says. “A lot of people don’t want to give up the content that they’re interested in and don’t want to pay the premium price of a non-ad-supported tier.”