Netflix is focusing on its efforts to get freeloading viewers to pay up. Earlier, we had reported that Netflix is planning to crack down on password sharing and now it seems that within the next two months, it will begin charging accounts for password sharing. The company during its earnings call has said that the rule will be enforced “more broadly” towards the end of the first quarter of 2023.
The practice of sharing passwords with people outside a subscriber’s household has been common. Once “paid sharing” is implemented, there will be a churn. The streaming giant has been testing various ways to crack down on password sharing in South America and began prompting users in Chile, Costa Rica, and Peru to pay for an extra sub-account. Netflix can detect if someone using an account lives outside the home that’s using the main account.
For years, Netflix has gone easy on password sharing but it started testing ways to “monetise account sharing” after recording its maximum subscriber losses in a decade. Besides password sharing fees, Netflix has also introduced cheaper subscriptions supported by advertising, which should bring in more viewers.
“We anticipate that this will result in a very different quarterly paid net adds pattern in 2023, with paid net adds likely to be greater in Q2 ’23 than in Q1 ’23. From our experience in Latin America, we expect some cancel reaction in each market when we roll out paid sharing, which impacts near term member growth. But as borrower households begin to activate their own standalone accounts and extra member accounts are added, we expect to see improved overall revenue, which is our goal with all plan and pricing changes,” Netflix has told shareholders.
The company has done fairly well in the fourth quarter of 2022 and has reported around 7.6 million new global subscribers. Its programming roster has been strong over the past few months and it has included Glass Onion: A Knives Out Mystery, Wednesday and Harry & Meghan.
Demand for the new ad-supported tier cannot be gauged at the moment. The newly-appointed co-chief executive Greg Peters called “ridiculously early” indications that its new ad-supported subscription tier is rolling out smoothly.
More than 100 million Netflix viewers now watch the service using passwords they borrow, often from family members or friends, the company has said. “While our terms of use limit use of Netflix to a household, we recognise this is a change for members who share their account more broadly. So we’ve worked hard to build additional new features that improve the Netflix experience, including the ability for members to review which devices are using their account and to transfer a profile to a new account. As we roll out paid sharing, members in many countries will also have the option to pay extra if they want to share Netflix with people they don’t live with. As is the case today, all members will be able to watch while travelling, whether on a TV or mobile device,” the letter to shareholders states.