Netflix has finally brought the policy that restricts account sharing to within a single household. In an email sent to members, the company emphasized that Netflix accounts are meant for the subscriber and the people they live with. The email stated that members can transfer a profile to someone outside their household, allowing that person to start their membership. Alternatively, they can choose to pay an additional fee of $7.99 per month for each person outside their household using their account. The extra members can be added to the standard and premium plans without ads.
Netflix’s decision to tighten password sharing guidelines stems from its aim to increase revenue and subscriber numbers, especially as it experienced stagnating growth. Originally planned for the first quarter, the crackdown was delayed until the second quarter. Netflix disclosed that over 100 million households share accounts, accounting for approximately 43% of its global user base. This sharing practice has impacted the company’s ability to invest in new content.
Netflix had previously implemented password-sharing guidelines in New Zealand, Canada, Portugal, and Spain. These countries required members to set a “primary location” for their accounts and allowed for two sub-accounts for additional fees if users resided outside the primary location. However, the recent notice provided U.S. households with two options: transferring a profile or paying a fee for an extra member. Specifics about setting a primary location were not provided.
While Netflix experienced some slowdown in subscriber growth internationally due to these initiatives, it still managed to add 1.75 million customers in the last quarter. In Latin America, the announcement led to cancellations initially, but many password borrowers later activated their accounts and added existing members as “extra member” accounts, resulting in increased revenue for the company.
Netflix executives have compared the transition to paid sharing to price increases, suggesting that initial resistance is followed by a gradual return of users who sign up for their own accounts. Additionally, Netflix introduced a cheaper, ad-supported tier to boost revenue following its first subscriber loss in over a decade in early 2022.
The bigger question that only time can answer remains whether this step will be welcomed by the audience.
But do you know the relieving news for Indians? These steps are far from getting implemented in India.
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