The world’s largest video streaming video platform – Netflix has hinted at a global crackdown on password sharing. The global warning seems like a serious one and has been termed as one that would automatically put an end to the rampant practice of borrowing family and friends’ login information.
An estimate of over 30 million U.S. and Canadian households are said to be guilty of the practice of sharing passwords to access content on the streaming platform. Additionally, the company has also estimated about 100 million households were likely using a shared password worldwide.
Netflix acknowledged in its quarterly shareholder letter how it has been generous with out-of-home password sharing, as this has helped get users hooked on the service. But as a result of the ever-growing competition from other streaming platforms like Disney, Warner Bros. Discovery, Paramount Global, NBCUniversal, Apple TV+ and others, Netflix is now looking to convert the millions of households sharing passwords into paying customers.
Netflix said in its letter that “Our relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds. Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with the first factor, means it’s harder to grow membership in many markets — an issue that was obscured by our COVID growth.”
For the first time in more than a decade, Netflix records a loss of about 200,000 paid subscribers in the first quarter which ended on March 31. By the completion of the second quarter, the company projects a total loss of 2 million more subscribers. The streaming platform which enjoyed a massive boom as a result of the pandemic currently records a total of 222 million global subscribers. The customer surge Netflix experienced during the pandemic has somewhat subsided and now turned negative as Covid-19 restrictions have also subsided in several parts across the globe.
Netflix has survived the password sharing practice for a long time, reasons because the company was, in the words of the co-founder and co-CEO Reed Hastings, “doing fine” without thoughts of taking harsh measures against users. According to the company “Sharing likely helped fuel our growth by getting more people using and enjoying Netflix. And we’ve always tried to make sharing within a member’s household easy, with features like profiles and multiple streams.” Netflix has built a friendly brand over the years with the practice of family sharing but the time has come that things have to change.
Earlier in the year, the company began testing different ways to curb password sharing in regions like Chile, Costa Rica and Peru. Executives said at the company’s earnings call that plans are in motion to expand the model laid out in those regions to the rest of the world thereby charging extra to accounts that share passwords out of the home. For now, Netflix hasn’t rolled out a concrete global strategy for the rest of the world but suggested global changes could come as early as 2023.