Netflix warns password sharing crackdown is coming
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Reed Hastings (CEO of Netflix) attends a conference in Mexico City.
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Your ex-boyfriend could have a difficult day today.
NetflixThe largest streaming video service in the world, YouTube, has warned of a crackdown against password sharing. It seems like a serious warning this time, and it could mean an end to the rampant practice of borrowing a family member’s or friend’s — or loose acquaintance’s — login information.
Netflix stated that it believes more than 30 million households in America and Canada are accessing Netflix’s content using shared passwords. Netflix estimated that more than 100,000,000 additional households worldwide were using the same password.
Netflix admitted in its quarterly shareholder letter that they had purposefully permitted generous out-of–home password sharing, as it was helping users to get hooked onto the service. However, there is competition from Disney, Warner Bros. Discovery, Paramount Global, NBCUniversal, Apple TV+Netflix and its streamers are limiting Netflix’s growth. Netflix wants millions of people to share their passwords so they can start paying.
Netflix stated in its letter that “relatively high household penetration, when you include the large number 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.”
Netflix suffered a loss of 200k paid subscribers. first quarter ended March 31 — the first time in more than 10 years Netflix has lost subscribers during a quarter. It is expected that the company will lose two million additional subscribers in its second quarter.
It currently boasts 222 million global subscribers. The streaming platform experienced a boom in growth after the pandemic. that customer surge has subsided — and now turned negative — as Covid-19 quarantines have largely lifted.
Plan the crackdown
Netflix is a company that has been able to live with password sharing since it was founded in “The Company Was” co-founder and co-CEO Reed HastingsIt is “doing fine”, but not taking strong action.
“In terms [password sharing]” Hastings said in 2016. You have to accept password sharing. There’s so many legitimate ways to share your passwords, such as with your spouse ….and with your children. It’s not a black line. We’re fine with it.
Netflix has developed a reputation for being a trustworthy brand, which has allowed password sharing.
The company stated in its shareholder letter that “sharing likely contributed to our growth” and said, “Getting more people to use and enjoy Netflix has helped us grow.” With features such profiles and multiple stream sharing, we have always attempted to make it easy for members of the household to share content.
Times have changed. At the same time, when growth slows down, people’s attitudes change.
Netflix launched earlier in the year. testing different ways to curb password sharing in Chile, Costa Rica and Peru.Netflix will add a fee to accounts sharing passwords outside of their home if it follows its model in these countries.
Netflix did not outline a global strategy but indicated that they will make global changes “in-the short-to mid-term.”
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Disclosure: CNBC is owned by Comcast.
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