Netflix gains subscribers with ads and password crackdown

SAN FRANCISCO — Netflix said subscriber numbers grew more than 10 percent to 247 million in the recently ended third quarter as it cracked down on passwords and refined an ad-supported tier.

The streaming service said in an earnings report that its nascent ad-supported offering was gaining traction, with the number of members increasing nearly 70 per cent in the quarter.

“Adoption of our ads plan continues to grow,’ Netflix said in a letter to shareholders according to AFP.

Netflix reported a profit of $1.68 billion on revenue of $8.5 billion in the quarter, beating market expectations with its earnings figures.

In May the Silicon Valley giant expanded its crackdown on users sharing passwords with people beyond their immediate family, as it seeks to shore up revenue after a rough patch last year.

The Silicon Valley-based streaming service has complained that more than 100 million households were sharing accounts.

To convert non-paying users, Netflix has introduced “borrower” or “shared” accounts, in which subscribers can add extra viewers for a higher price or transfer viewing profiles to new accounts.

In a separate bid for revenue, Netflix launched an ad-subsidized offering around the same time as the crackdown and later eliminated its lowest priced ad-free plan that cost $10 a month in the US.

Netflix late last year launched the ad-supported subscription tier for $7 monthly.

Netflix mailed out its last DVD in September, ending a service after 25 years that helped the company grow into an entertainment behemoth.

Founder Reed Hastings has often said that he started the company in a pique of frustration with the Blockbuster rental store that charged him $40 for returning the movie “Apollo 13” six weeks late.

Out of that eventually came the idea for a subscription based DVD-by-mail service that let the customer hold onto the title as long as they wanted.

Once viewed, the DVD was slipped into a prepaid envelope and sent back to the company, with the subscriber’s next choice sent on its way in exchange.