Gone are the days of freely granting access to your Netflix, to friends and distant relatives. The new rules of the game — which now has several players — demand a re-evaluation of streaming habits and place a premium on individualized subscription experiences. As a result, Netflix has finally decided to crack down on password sharing, starting with the US. In a blog post, the streaming giant detailed how the crackdown will affect users and unless they want to pay more for an additional membership, subscribers will have to kick other users off their accounts.
The crackdown on password sharing will now roll out to Netflix subscribers in the US, and will later roll out to global markets in the coming weeks and months. As the streaming giant rolls out the crackdown, users in the US (and in time, across the globe) are faced with a daunting ultimatum: severe ties with freeloaders or open their wallets to foot the bill for additional memberships. The streaming service has begun notifying US subscribers who share passwords with people outside their household. According to the company, it uses information such as IP addresses, device IDs, and account activity to determine whether a device signed into one account is part of their Netflix Household.
Netflix notes that if users want to retain others on their account, they will have to pay $7.99/month for an additional membership for the freeloaders. This development comes after Netflix planned to introduce paid sharing to subscribers in the US in Q1 2023, but later pushed it back to June. Now, the freeloaders have the option to transition to an account of their own through a “Transfer Profile” option, which will help them to save their viewing history and watchlist and relocate their existing account information. So subscribers can either “buy” an extra member with an additional $7.99 per month, or have them transfer a profile to a new membership. Viewers who have grown accustomed to sharing their Netflix accounts with friends and family members may find themselves at a crossroads, contemplating a shift in their streaming habits or adjusting their subscription plans.
While the crackdown on password sharing may come as an inconvenience to some subscribers, it is a strategic move by Netflix to protect its business interests. By curbing unauthorized account access, the company aims to bolster its subscription revenue and maintain a fair ecosystem for all users. The streaming giant noted that more than 100 million households shared accounts with others, which made up about 43% of its global user base. This ensured that Netflix was unable to hook in these viewers to subscribe to it, even though they took advantage of it to stream content on its platform.
As the race for subscribers intensifies and competition reaches new heights, streaming platforms are compelled to protect their interests and ensure a sustainable business model. While Netflix is one of the more well-known players in the streaming sector, it competes with solid rivals and cannot afford to lose subscribers after last year. In Q1 2022, it revealed its first subscriber decline since 2011, with a loss of 200,000 subscribers, while it lost nearly one million in the second one. In the previous quarter, Netflix reported a net increase of 1.75 million global subscribers in the quarter – taking the total number to 232.5 million accounts across the globe – but the growth fell short of Wall Street estimates of 3 million.
“We see an initial cancel reaction and then we build out of that, both in terms of membership and revenue as borrowers sign up for their own Netflix accounts and existing members purchase that extra member facility for folks that they want to share with,” Netflix co-CEO Greg Peters told investors on the first-quarter earning call last month. “So, first of all, it was a strong validation to see consistent results in these new countries, because there are different market characteristics different from each other and also different from the original Latin American rollout countries,” he added.
“A Netflix account is for use by one household. Everyone living in that household can use Netflix wherever they are — at home, on the go, on holiday — and take advantage of new features like Transfer Profile and Manage Access and Devices. We recognize that our members have many entertainment choices. It’s why we continue to invest heavily in a wide variety of new films and TV shows — so whatever your taste, mood or language and whoever you’re watching with, there’s always something satisfying to watch on Netflix,” Netflix wrote in the blog post on Tuesday.