Netflix, the streaming giant, announced in its recent earnings report to shareholders that it will be cracking down on password sharing in the first quarter of this year. The company stated that the practice of sharing passwords with individuals outside of the subscriber’s household will become more complex and may involve an additional fee.
This move by Netflix is not surprising, as the company has been losing revenue due to password sharing for years. According to a study by Parks Associates, nearly 30% of all U.S. Netflix users share their account with at least one non-household member. Netflix’s new policy aims to combat this loss of revenue by making it more difficult for users to share their accounts, and potentially charging extra for the privilege.
However, Netflix has stated that members will still be able to watch while traveling, whether on a TV or mobile device. This is a smart move by the company, as it acknowledges the reality of people sharing their accounts while on vacation or traveling for work.
The company also acknowledged that this change may have a negative impact on engagement in the short term, as some users may stop watching or not convert to full paying accounts. However, Netflix believes that engagement will grow over time as they continue to deliver a great slate of programming and users sign up for their own accounts.
It is worth noting that Netflix has already tested these new stricter rules in select Central and South American countries last year, and based on the trial, the company expects a negative reaction in the short term.
No specific date has been given by Netflix for when the crackdown will begin, only stating that it will be later in Q1 of 2023. This move by Netflix is a clear indication of the company’s focus on revenue generation, as it looks to combat the financial loss caused by password sharing.
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