Netflix, the world’s largest streaming video service, has issued a global warning about password sharing. This time, it appears to be a serious warning, and it may signal the end of the widespread habit of borrowing a family member’s or friend’s — or even a casual acquaintance’s — login information.
Netflix says that more than 30 million homes in the United States and Canada use a shared login to access its content. According to the business, more than 100 million extra homes throughout the world are likely to utilise a shared password.
Netflix stated in its quarterly shareholder letter that it had purposely permitted generous out-of-home password sharing because it has helped consumers become addicted to the service.
Netflix claimed it wants the millions of homes sharing passwords to start paying, citing competition from Disney, Warner Bros. Discovery, Paramount Global, NBCUniversal, Apple TV+, and other streamers.
“Our relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds,” Netflix said in its letter. “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.”
Netflix lost 200,000 paying customers in the first quarter ended March 31, marking the first time the company has lost subscribers in a quarter in more than ten years. In the second quarter, the business expects to lose another 2 million members.
There are currently 222 million subscribers to the streaming platform around the world. It saw rapid growth during the epidemic, but as Covid-19 quarantines have been lifted, that growth has slowed – and has gone negative.
Netflix has tolerated password sharing because, in the words of co-founder and co-CEO Reed Hastings, the firm was “doing great” without taking any drastic measures.
“In terms of [password sharing], no plans on making any changes there,” Hastings said in 2016. “Password sharing is something you have to learn to live with, because there’s so much legitimate password sharing, like you sharing with your spouse, with your kids …. so there’s no bright line, and we’re doing fine as is.”
Over the years, Netflix has developed a consumer-friendly brand, and permitting password sharing has aided that image.
“Sharing likely helped fuel our growth by getting more people using and enjoying Netflix,” the company said in its shareholder note. “And we’ve always tried to make sharing within a member’s household easy, with features like profiles and multiple streams.”
However, the times have changed. When growth slows, people’s attitudes tend to shift.
Netflix began exploring several approaches to prevent password sharing in Chile, Costa Rica, and Peru earlier this year. On the business’s earnings call on Tuesday, executives indicated the company may expand the model it established in those nations, charging extra for accounts that share passwords outside of the home.
Netflix has yet to lay out a precise worldwide plan, but it has hinted that global changes could arrive as early as 2023.
(Adapted from BusinessInsider.com)