The Daily Observer London Desk: Reporter- John Furner
Netflix is booting freeloaders from its US-paying customers’ accounts.
The streaming giant is officially cracking down on password sharing by limiting viewership of its platform to users living in the same household.
Customers paying for standard or premium plans – which cost $15.50 to $20 per month – can share their login credentials with someone for an additional $8 per month, a $2 discount from the company’s standard stand-alone basic plan.
Without providing details on how it authenticates subscriber identities or accounts, Netflix assured that everyone living in the same household will still be able to stream TV series and movies ‘wherever they are – at home, on the go, on holiday.’
The long-anticipated move has been looming over the US since it was revealed by Netflix in 2021 to end lost revenues – Citi Bank estimated the company lost $6 billion annually from password sharing.
Netflix is officially cracking down on password sharing by limiting viewership of its platform to users living in the same household
While Netflix did not share its revenue lost, it revealed in January that ‘widespread account sharing’ has exceeded over 100 million viewers.
Those passwords were funneled through Netflix’s 232.5 million worldwide paying subscribers, who generated the bulk of the company´s $32 billion in revenue last year.
But a year of lackluster subscriber growth included its most significant customer losses in more than a decade.
Netflix said 2022 had been a ‘tough year’ due to its first subscriber loss in more than a decade – its customer base fell by 200,000 subscribers in the first quarter.
And now the streaming giant is putting its foot down.
Those freeloading off paid accounts can transfer their Netflix history to their own paying account.
In January, Netflix co-CEO Greg Peters acknowledged that the crackdown on password sharing might risk more subscriber cancellations.
‘It’s worth noting that this will not be a universally popular move,’ Peters advised investors.
Those freeloading off paid accounts can transfer their Netflix history to their own paying accounts
‘Any attrition in the U.S. would deepen the erosion within a region where Netflix lost about 920,000 subscribers last year.’
In February, it began blocking freeloading viewers in Canada, New Zealand, Portugal and Spain, following similar moves in Latin America.
The password-sharing ban had initially been slated for worldwide rollout by the end of March, but Netflix said it expected to complete the transition in the US by the end of June with new features that will prompt users to get their own accounts.
But it seems that time has come sooner than later.
Netflix has tested several approaches to the password-sharing issue internationally.
It is expected to offer subscribers the option to create sub-accounts for additional users outside their households for a small added fee.
Before the crackdown on password sharing, Netflix began introducing features, such as the ability to transfer the profiles set up on subscriber accounts to make it easier for people to retain their viewing histories after they can no longer watch shows for free.
Netflix’s effort to force more viewers to pay for access to its programming follows the launch of a $7 monthly plan that inserted commercials into its service for the first time.
Netflix has picked up an additional nine million worldwide subscribers since the ad-supported option debuted, although not everyone signed up for the low-priced plan.
Although the new US surcharge for viewers outside subscribers’ households is less than Netflix’s basic streaming plan, it comes at a time when Americans have been paring their discretionary spending because of high inflation.
Netflix’s shares fell two percent during Tuesday’s afternoon trading, but the stock price is still up by about 20 percent this year.
