Netflix to Implement Stricter Measures Against Password Sharing in Summer
Netflix plans to roll out its “paid sharing” initiative in the US, aimed at converting account sharers into paying users, on or before June 30. Netflix is optimistic that the move will have a better outcome for both members and the business, despite likely having a short-term impact on member growth. The initiative was launched earlier this year in Canada, New Zealand, Portugal, and Spain. Netflix aims to allow up to two additional members per account, with a fee per extra user that varies by country.
Netflix’s long-awaited crackdown on password sharing is finally coming to the US. The streaming giant had originally planned to roll out “paid sharing” in the first quarter of 2023. However, it has recently announced that it would start rolling out the change, an update aimed at converting account sharers into paying users, on or before June 30. The streaming service will begin a broad rollout of the new feature, including in the US, in Q2.
Netflix’s move to curb password sharing is not limited to the US alone. Earlier this year, Netflix launched the initiative in Canada, New Zealand, Portugal, and Spain. In these countries, Netflix requires paying users to set a “primary location” for their accounts. Moving forward, if someone they don’t live with uses their account, Netflix alerts them to “buy an extra member.”
Netflix allows up to two additional members per account, and its fee per extra user varies by country. For example, it’s an additional CAD $7.99 in Canada and €3.99 in Portugal.
The streaming giant is optimistic that this move will have a better outcome for both members and its business. Netflix said, “We see a cancellation reaction in each market when we announce the news, which impacts near-term member growth. “But as borrowers start to activate their accounts and existing members add “extra member” accounts, we see increased acquisition and revenue.”
The primary purpose of the new feature is to increase revenue by converting account sharers into paying customers. The change will undoubtedly have a significant impact on the company’s bottom line. Netflix’s first-quarter revenue in 2023 was $8.16 billion, which was lower than Wall Street’s expectations of $8.18 billion. However, the company reported higher-than-expected earnings of $2.88 per share in Q1, while analysts had anticipated $2.86 per share.
Earlier this year, Netflix summarized its paid-sharing update as a chance to clarify “confusion about when and how you can share Netflix.” Still, the company aims to crack down on password sharing. While it is likely to cause some short-term member growth impact, Netflix is confident that the long-term benefits of converting account sharers into paying users will outweigh the costs.
In its Q1 2023 earnings report, Netflix announced that it would say goodbye to its 25-year-old mail-order DVD business, which is no longer profitable. The business’s choice to concentrate on streaming services has paid off, and it now rules the streaming sector.
As of 2:58 p.m. PT, Netflix’s stock price ended regular trading at $333.70 per share. After hours, the company’s share price dropped below $307 before rebounding to around $330.