Netflix hints at global crackdown on password sharing after subscriber loss

Netflix hinted that it might crack down on password sharing after reporting a lack of 200,000 subscribers within the first quarter of 2022.
SOPA Photographs/LightRocket by way of Gett

Netflix hinted that it could begin cracking down on its beneficiant coverage permitting widespread password sharing amongst buddies and family of subscribers after the corporate reported it had shed 200,000 subscribers within the first quarter of this 12 months.

Netflix’s 26% inventory tumble after the bell on Tuesday erased about $40 billion of its market worth. Because it warned in January of weak subscriber progress, the corporate has misplaced almost half of its worth.

In a Tuesday letter to traders, Netflix urged that it might begin forcing password customers to pay for the service.

“Our comparatively excessive family penetration — when together with the massive variety of households sharing accounts — mixed with competitors, is creating income progress headwinds,” Netflix stated in its letter to shareholders.

“Account sharing as a proportion of our paying membership hasn’t modified a lot through the years, however, coupled with the primary issue, means it’s tougher to develop membership in lots of markets — a problem that was obscured by our COVID progress.”

Shares of Netflix plunged by greater than 26% after the bell on Tuesday.

Google

Netflix has traditionally been fairly liberal with its password-sharing insurance policies.

“Sharing doubtless helped gasoline our progress by getting extra individuals utilizing and having fun with Netflix,” the corporate stated in its shareholder word.

“And we’ve all the time tried to make sharing inside a member’s family straightforward, with options like profiles and a number of streams.”

The Los Gatos, Calif.-based streaming big stated it expects to lose an extra 2 million subscribers by the tip of second quarter.

Netflix traditionally has been liberal with its password-sharing insurance policies.

SOPA Photographs/LightRocket by way of Gett

It was the primary time in additional than a decade that Netflix reported a lack of subscribers.

The corporate stated that some 30 million households in North America are utilizing a shared password to realize entry to the service’s library. Worldwide, Netflix put that determine at greater than 100 million households.

Netflix is dropping clients to rivals comparable to Disney, Warner Bros. Discovery, Paramount International, NBCUniversal, and Apple TV+.

Earlier this 12 months, Netflix rolled out a pilot program to restrict password sharing in international locations like Chile, Costa Rica, and Peru. An enlargement of this system globally might come someday subsequent 12 months.

Netflix’ international subscriber base numbers 222 million customers — a quantity that grew considerably as viewers have been caught at house throughout the COVID-19 pandemic.

Netflix stated inflation and the conflict in Ukraine additionally contributed to a loss of subscribers.

Suspending service in Russia after the Ukraine invasion resulted within the loss of 700,000 members.