By encouraging users who previously shared passwords for free access to transition into paying members, Netflix aims to strike a balance between revenue generation and maintaining subscriber loyalty.
Netflix announced that sharing account passwords beyond immediate family members is no longer permissible in 103 countries and territories, including Australia, Brazil, France, Germany, Mexico, US, UK and Singapore.
In April, Netflix promised during its first quarter earnings call that it will end the sharing of passwords by the end of the second quarter in June.
“A Netflix account is for use by one household,” the company said in a statement. Netflix said early this year that more than 100 million households were sharing accounts at the service, “impacting our ability to invest in great new TV and films.”
To address the issue while maintaining subscriber satisfaction, Netflix had previously experimented with “borrower” or “shared” accounts in select markets.
These accounts allowed subscribers to add extra users for a higher price or transfer viewing profiles to separate accounts. Building on this approach, Netflix now plans to extend the account sharing initiative to over 100 countries, providing a larger base of potential paying members.
“This account sharing initiative helps us have a larger base of potential paying members and grow Netflix long term,” Co-Chief Executive Ted Sarandos said.
By encouraging users who previously shared passwords for free access to transition into paying members, Netflix aims to strike a balance between revenue generation and maintaining subscriber loyalty.
Although Netflix initially planned a broad crackdown on password sharing, the company opted to delay the implementation to ensure a seamless transition and enhance the overall user experience.
The recent surge in Netflix’s subscriber base underscores its popularity and market dominance. In the first quarter of this year, the streaming giant reported a record high of 232.5 million subscribers, indicating its continued global appeal. Additionally, Netflix’s nascent ad-supported tier has garnered over 5 million subscribers, demonstrating its success in diversifying revenue streams.
The crackdown trial in some territories was mostly positive.
In Canada, where the changes were introduced in February, its paid membership base is now larger than it was before the changes, and revenue growth picked up. But, in Spain, when it started charging 5.99 euros (£5.27) for an additional account, Netflix lost more than a million subscribers in the first three months of the year, according to Kantar.
