Business & EconomyNetflix password-sharing crackdown begins

Netflix password-sharing crackdown begins

The United States has officially initiated its crackdown on Netflix password-sharing. Following recent restrictions in Canada, Spain, Portugal, and New Zealand, Netflix is now implementing account-sharing limits in the U.S.

According to the streaming company, only individuals residing in the same household will be allowed to share accounts. Therefore, if you wish to share your account with someone outside your household, you have two choices: transfer their profile to a new membership or share your Netflix account for an extra monthly fee of $8.

“Your Netflix account is for you and the people you live within your household,” Netflix said in an email to U.S. subscribers.

Netflix Targets Bigger-earnings

As competition in the streaming industry intensifies and subscriber growth slows down, Netflix has shifted its stance on sharing account credentials with friends and extended family.

To generate additional revenue, Netflix is now targeting those who have been using shared accounts without contributing financially. Ted Sarandos, the co-CEO of Netflix, explained that this strategy aims to involve more viewers in supporting the creation of future content. According to Cowen senior research analyst John Blackledge, this initiative could potentially attract 2.1 million new subscribers in the United States alone.

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In February 2023, it accounted for 7.3% of total TV viewing, as reported by Nielsen. While the password-sharing initiative may cause some temporary discontent among subscribers, Moody’s Investors Service believes it presents a significant opportunity for revenue growth and margin expansion.

Wells Fargo Securities suggests that paid password sharing could potentially yield higher earnings for Netflix compared to people signing up for its ad-supported subscription.

Why The Crackdown?

According to a 2022 survey conducted by Parks Associates, 40% of consumers in U.S. internet households either share their streaming service credentials or use shared credentials, which is an increase from 27% in 2019.

The company itself states that approximately 100 million people watch its content using someone else’s account. Citi analyst Jason Bazinet estimated that streaming services collectively lose around $25 billion annually due to password-sharing, with Netflix accounting for approximately 25% of that lost revenue.

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