San Francisco Frontiers - Netflix gains subscribers with ads and password crackdown

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 percent in the quarter.

"Adoption of our ads plan continues to grow,' Netflix said in a letter to shareholders.

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.

- Actors strike -

The earnings report came as Netflix and other film and television makers see productions halted by an actors strike in the United States.

Hollywood writers had also been on strike, but came to a tentative agreement with studios just weeks ago.

During the strike, Netflix said it was relying on a "pretty robust slate of releases" and a large base of upcoming films and shows from around the world.

A Netflix adaptation of Japanese manga comic "One Piece" was watched more than 18 million times in its first four days, putting it at the top of the charts.

The story of Monkey D Luffy, a boy with a straw hat and stretchy superpowers determined to become king of all pirates by finding a treasure known as the "One Piece" has captivated manga fans since its first editions in 1997.

"We continue to focus on improving our slate, with best-in-class originals and licensed titles from around the world," Netflix told shareholders in the letter.

Netflix cited popular shows including "One Piece", "Class Act" out of France, and "Guns & Gulaabs" from India.

H.Davis--SFF