Netflix is intensifying its efforts to combat password sharing and increase revenue. The streaming giant announced that a Netflix account should only be used by one household, expanding its crackdown on password sharing beyond immediate family members.
The move comes in response to the widespread practice of password sharing, which has impacted Netflix’s ability to invest in new content. Netflix had previously experimented with “borrower” or “shared” accounts in select markets, allowing subscribers to add additional users for a higher fee or transfer viewing profiles to
separate accounts. Now, this policy is being extended to over 100 countries. Co-chief executive Ted Sarandos stated that the account sharing initiative will help Netflix expand its base of potential paying members and ensure long-term growth.
The company aims to strike a balance between encouraging free viewers to become paying subscribers and
maintaining a positive user experience. Independent tech analyst Rob Enderle explained that Netflix likely pays royalties for shows or films watched on its platform, meaning non-paying viewers add to the company’s expenses
without contributing to revenue. By curbing password sharing, Netflix aims to reduce the loss
of potential income.
This move coincides with Netflix’s recent milestone of reaching a record-high 232.5 million subscribers in the first quarter of the year. Additionally, the company’s nascent ad-supported tier has been successful, with over five million subscribers. Analysts believe that launching the ad-supported offering alongside the password crackdown is a strategic move to appeal to price-sensitive customers who may choose the cheaper ad tier.
While this crackdown may prompt some freeloaders to consider the ad-supported tier, there is also a risk that former free viewers may shift to other streaming services like Prime Video, Disney+, or HBO Max. Nonetheless, the rise of digital video platforms is undeniable, with US adults projected to spend more time watching digital content than traditional television this year, according to Insider Intelligence.
