Netflix Is Changing Policy to Prevent Password Sharing

Similar to other streaming services, Netflix experienced a significant increase in growing during the Covid lockdowns. However, as the lockdown has ended, the streaming giant saw significant drops in numbers. In an attempt to keep the numbers up, Netflix announced its new policy to prevent people from sharing passwords.

In a recent letter to the shareholders, Netflix revealed that the company lost 200,000 subscribers during last quarter. Although the company gained 500,000 customers during this time period, it lost 700,000 subscribers due to the suspension of services in Russia for a total net loss of 200,000 customers.

These numbers were pretty disappointing for the streaming giant as the company projected a total of 2.5 million subscribers during this quarter. Additionally, Netflix believes that it’ll lose another 2 million subscribers in the next quarter. During the same period last year, the company gained 1.5 million subscribers.

Despite this, the company expects to grow as it wrote in the letter to the shareholders. Netflix wrote, “However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds. The big COVID boost to streaming obscured the picture until recently. While we work to reaccelerate our revenue growth – through improvements to our service and more effective monetization of multi-household sharing – we’ll be holding our operating margin at around 20%.”

In addition to the sharing of passwords, the company noted the high level of competition from other streaming services such as Disney+, HBO Max, Hulu, Amazon Prime, and AppleTv+. Considering there wasn’t this much competition when Netflix joined the streaming market, the decline in growth isn’t particularly surprising.

In order to crackdown password sharing, the company revealed its plan for the possibility of monetization for password sharing. The company wrote, “Early last year we started testing different approaches to monetize sharing and, in March, introduced two new paid sharing features, where current members have the choice to pay for additional households, in three markets in Latin America. There’s a broad range of engagement when it comes to sharing households from high to occasional viewing. So while we won’t be able to monetize all of it right now, we believe it’s a large short- to mid-term opportunity.”

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