Given its recent earnings report, it looks like Netflix will have to crack down on password sharing. The company has actually already enacted a plan, but only in a few countries. So how is Netflix cracking down on password sharing? Let’s find out.
Password Sharing Is One of Netflix’s Biggest Problems
Netflix is tackling the issue of password sharing after slow revenue growth in Q1 2022, partly due to account sharing. In a shareholder letter from Netflix, the streaming platform estimates that its service is being shared with more than 100 million households.
However, account sharing isn’t the company’s only problem. Despite having 222 million active subscribers, Netflix also lost 200,000 subscribers during the first three months of 2022 after estimating that it would gain around 2.5 million new customers, which also affected its bottom line.
Because members on Netflix’s Standard and Premium plans have long been able to share their accounts with the people they live with, Netflix believes that this has caused confusion about when and how you can share your account.
According to a Netflix blog post, the company notes that this makes it challenging to invest in new content. As a result, the service is cracking down on account sharing to prevent further losses and hopefully encourage more people to sign up for the service.
How Netflix Is Cracking Down on Password Sharing
Netflix wants to monetize on password sharing to reduce the number of people freeloading on its service and add more subscribers.
So in March 2022, Netflix started testing two new sharing features that will let users share their accounts outside their household for an extra price. For now, it’s still too soon to worry about Netflix charging to share passwords worldwide. These two features will only be available in Chile, Costa Rica, and Peru in the next few weeks.
The first feature is the option to Add an Extra Member. This feature will let members of the Standard and Premium plans add up to two sub accounts for people who live outside their homes.
Each account gets its own profile, personalized recommendations, and login credentials. This feature will cost members 2,380 CLP in Chile, $2.99 in Costa Rica, and 7.9 PEN in Peru.
The second feature is called Transfer Profile to a New Account. Members on Netflix’s Basic, Standard, and Premium plans will be able to let someone using their account transfer their profile information to either a new account or an extra member sub-account.
This essentially allows the migrating account to keep its account content, including its viewing history, My List content, and personalized recommendations.
Will Netflix’s Plan to Stop People Sharing Passwords Work?
Netflix’s plan to monetize on password sharing may work to some extent, but not entirely, as members will still be able to share their passwords with people in other homes. This is because Netflix isn’t forcing members to buy the new features, just as it won’t punish them for continuing to share their accounts.
Likewise, as of right now, Netflix hasn’t mentioned anything about adding limitations to members’ accounts to avoid account sharing.
Netflix will need to be careful, though. As we mentioned, the platform is losing subscribers, and its prices are on the rise in the US and Canada, which is part of why people share their accounts. Netflix might need to offer an ad-supported plan or another deal to make customers want to subscribe or keep their subscriptions.
Netflix Has a Long Way to Go
People share accounts because not everyone thinks Netflix’s premium plan is worth it. Therefore, Netflix has its work cut out for it and won’t see any significant changes unless it implements tighter restrictions on members. That’s why the service has to give more thought to its plans if it wants to tackle the issue of account sharing more effectively.
