- Netflix's password-sharing crackdown helped it add 6 million subscribers in the second quarter.
- Despite the jump there could be tough times ahead for the streaming pioneer.
Netflix thinks its password-sharing crackdown has been good for business.
The streamer added just under 6 million subscribers in the second quarter, it said in an earnings report Wednesday. It partly attributed the rise to new measures imposed in May that made it harder to share accounts between households.
It's no surprise Netflix is focusing on that increase, but there's the very real prospect of tougher times ahead for Netflix.
For one, the company operates in a highly competitive market with rivals all desperate to erode its market share.
"We expect that competition will remain intense," Netflix said in its results commentary Wednesday, citing Disney, Comcast, Paramount, Warner Brothers Discovery, Apple, Amazon, and YouTube. "There's quite a competitive battle happening."
Hollywood strikes, which have seen both actors and writers take to the picket lines, also means more uncertainty for Netflix.
"Stranger Things," "Emily in Paris," and many other Netflix shows have halted production because of the walkouts – and the streamer will struggle to retain subscribers and add new ones if its pipeline of new material dries up for any length of time.
Lastly, there's the question of what shareholders really care about: growth.
Wednesday's results showed revenue rising by a paltry 2.7% in the second quarter, falling short of Wall Street's expectations.
Netflix's forecast of $8.5 billion for the three months to September 30 is also less than analysts had been expecting.
Shares dipped more than 6% ahead of Thursday's opening bell, suggesting that investors weren't swayed by rising subscriber numbers – but were instead disappointed by the company's inability to make more cold, hard, cash.