Netflix’s decision to crack down on password sharing has been a long time coming. The company previously turned a blind eye to password sharing because it was fueling growth, but last year it said it was going to take action because it was hurting its bottom line.[0] The streaming giant estimated that more than 100 million households worldwide share an account, resulting in millions of dollars in lost revenue.[0] Account sharing may have even contributed to Netflix’s first subscriber loss in more than a decade in early 2022.[1]
To address this issue, Netflix has announced that subscribers on its Standard or Premium plans will have the option to add up to two extra members to their account, but they will have to pay an extra $7.99 a month (or £4.99 in the UK) for each additional member.[2] Unfortunately, extra member slots are not available under Netflix’s Basic or Standard with Ads plans, which cost $9.99 and $6.99 per month, respectively.[3]
Netflix has also begun sending emails to members who are sharing their account information outside of their households in the US and 103 other countries and territories, including the UK, France, Germany, Australia, Singapore, Mexico, and Brazil.[4] The emails remind sharers that a Netflix account is for use by one household and that anyone outside that household will need to sign up for their own account or be added to an existing account for an additional fee.[5]
Netflix understands that this decision will inspire backlash, but it views this as it would a normal price increase. The company anticipates a “cancel reaction” among Netflix’s user base in response to this change, but it believes people who leave will come back, and the change is worth the extra money it will bring in. Netflix’s clampdown on subscribers sharing accounts between households has already been tested in Canada, New Zealand, Portugal, and Spain, and the company was pleased with the results, which included a larger Netflix membership base and an acceleration in revenue growth.[6]
While sharing a Netflix account with friends or family members outside of one’s household might not seem like a big deal, the cost in lost revenue opportunity for Netflix is enormous.[7] For context, the company closed out the first quarter of 2023 with roughly 232 million accounts worldwide.[7] Bringing all 100 million more viewers on board would boost Netflix’s subscriber base by roughly 43%.[7] As such, it is understandable that Netflix would want to crack down on password sharing to improve its financial bottom line and invest in and improve the service for paying members.
0. “Netflix begins password sharing crackdown in the US” WSIL TV, 23 May. 2023, https://www.wsiltv.com/news/consumer/netflix-begins-password-sharing-crackdown-in-the-us/article_a7c81aa7-e671-50a8-bb76-bd6d4bba22fa.html
1. “Netflix Cracks Down on Account Sharing Between Households” Investopedia, 23 May. 2023, https://www.investopedia.com/netflix-cracks-down-on-account-sharing-between-households-7503230
2. “Netflix’s crackdown on password sharing has reached the US” The FADER, 24 May. 2023, https://www.thefader.com/2023/05/24/netflix-password-sharing-us-details
3. “Netflix password sharing crackdown begins: New pricing, rules revealed” Mashable, 24 May. 2023, https://mashable.com/article/netflix-password-sharing-rules-pricing
4. “Netflix announces password sharing crackdown rollout in US” GMA, 24 May. 2023, https://www.goodmorningamerica.com/culture/story/netflix-announces-password-sharing-crackdown-rollout-us-99551562
5. “Netflix’s password sharing crackdown officially hits US users” Yahoo Finance, 23 May. 2023, https://finance.yahoo.com/news/netflixs-password-sharing-crackdown-officially-hits-us-users-183143562.html
6. “Netflix Begins Crackdown on Password Sharing in US and UK” MacRumors, 24 May. 2023, https://www.macrumors.com/2023/05/24/netflix-starts-password-sharing-crackdown
7. “Netflix Viewers: Check Your Email. The Password Sharing Crackdown Has Begun.” The Motley Fool, 24 May. 2023, https://www.fool.com/investing/2023/05/24/netflix-viewers-check-your-email-the-password-shar/