Netflix’ password sharing gambit and the rise of free streaming apps

Key takeaways

• The U.S. market is fiercely competitive, while Europe is dominated by a select few.

• Netflix's crackdown on password sharing had mixed results in Europe, but the U.S. surged ahead.

• Unbeatable user retention propels Netflix ahead of its competitors.

• Free streaming apps hold potential but must strategically advertise to gain market share.

The television streaming landscape has experienced a revolutionary transformation in recent years, captivating audiences worldwide and reshaping the way we consume entertainment. As the interest in on-demand content continues to surge, the United States and Europe stand as two distinct powerhouses in this ever-evolving market. Amidst this dynamic landscape, a bold move by Netflix sent ripples throughout the streaming industry. The company embarked on a daring crackdown against password sharing, a common practice that allowed users to share login credentials among friends and family, effectively extending access without additional subscriptions. As we traverse through the intricacies of the streaming industry, Sensor Tower data unveils the secrets behind Netflix's unmatched user retention rates, setting it apart from competitors such as Hulu and Disney. Additionally, we explore the strategies employed by free streaming apps to capture the attention of audiences who frequent dominant platforms, revealing the key to their potential success.

The Impact of Netflix's Crackdown on Password Sharing

The crackdown on password sharing by Netflix had an interesting impact on its global and regional user base. Globally, the Netflix app observed a 1 percent rise in weekly active users (WAU) during the five weeks following the crackdown compared to the five weeks prior. In the United States, the increase in WAU was more substantial, reaching 2.3 percent. However, in Europe, the results were mixed, with France experiencing a 3 percent drop in WAU, while Germany and the UK saw no significant impact.

Streaming Loyalty: Netflix’s Strong User Retention

Despite the challenges posed by regional variations in response to the password sharing crackdown, Netflix demonstrated remarkable user retention capabilities. In Q2 2023, a staggering 79 percent of all Netflix app users consistently used the app month to month. Furthermore, the number of users who went without opening the app for a month was relatively small. In comparison, streaming giants Hulu and Disney fell behind in retaining users, with both having retention rates below 70 percent over the same period.

Overall, the impact of Netflix's crackdown on password sharing underscores the significance of strategic decisions in the streaming industry. It exemplifies how a single policy change can influence user engagement, loyalty, and revenue streams on a global and regional scale, making it a critical case study for streaming platforms seeking to navigate the ever-changing landscape of television streaming.

The Rise of Free Streaming Apps

An interesting development in the streaming market is the emergence of free streaming apps that operate on ad-supported models. Apps like Freevee, Tubi, and Pluto TV are aiming to grab a share of the market, but data from Sensor Tower's App Overlap reveals that their users are primarily engaging with larger paid streaming apps like Netflix, Disney+, and Amazon Prime Video. Moreover, the users of these dominant streaming services are also highly likely to use other popular apps like Amazon, Spotify, Pinterest, and Reddit.

With the market's attention concentrated on the major streaming apps, the key to success for new free streaming services lies in attracting users from these dominant players rather than competing directly with other ad-based streaming platforms. The data suggests that free streaming apps should focus on strategic advertising within the larger paid apps to entice some of their users. By offering compelling content and leveraging targeted advertising, free streaming apps have a better chance of carving out their space in the competitive streaming landscape.

The television streaming market is in a constant state of flux, and recent developments have shed light on the strategies employed by streaming giants like Netflix to retain and expand their user base. While Netflix's crackdown on password sharing yielded mixed results in different regions, its impressive user retention has solidified its position in the market. Simultaneously, the rise of free streaming apps presents both challenges and opportunities for these newcomers. By understanding user behavior and adopting a targeted approach to advertising, free streaming apps can carve their niche in this highly competitive industry. As the streaming landscape continues to evolve, it will be fascinating to see how these trends shape the future of television streaming.

For a deeper dive into the data and analysis presented in this post, read the full report below.