If you’ve been using your ex-girlfriend’s parents’ Netflix password for years, there’s a dark day coming. The video streaming service says it’s going to crack down on the 100 million households around the world using another household’s account.
But the company is also considering a cheaper, ad-supported option. That might attract people about to be cut off.
You’ll soon have to actually pay for Netflix
For many years, Netflix didn’t make an issue about the number of people sharing accounts. It even says, “Sharing likely helped fuel our growth by getting more people using and enjoying Netflix.”
But it’s reached the point where the company now says, “In addition to our 222m paying households, we estimate that Netflix is being shared with over 100m additional households.” And 30 million of those households using an account they aren’t paying for are in the U.S. and Canada.
The streaming service says there’s so much password sharing that it’s hurting subscriber growth.
It has a solution. Recently, the company began testing two new paid sharing plans in three markets in Latin America. These give current members the option to pay a bit extra to share their password with additional households. The trials were successful enough that the company will expand the program.
But the people who don’t know their password is shared aren’t likely to pay extra for it. Like parents who gave their daughter their Netflix login details not knowing she gave them to her boyfriend who then shared them with all his friends.
How Netflix can crack down on password sharing
Netflix could cut out a large percentage of password sharing simply by making its users change their password. In the example above, the parent will likely give the new password to their daughter, but she wouldn’t share it with her now ex-boyfriend.
Another option is IP tracking. An account that’s regularly being used from multiple IP addresses at the same time could be flagged by Netflix, and the account owner asked to pay extra for the additional users. Or cut them off.
Russian invasion of Ukraine hurt subscribers, too
The number of paid Netflix subscribers went down 200,000 during the first quarter of 2022. Previously, there hadn’t been a decline since 2011.
But the situation is more complex than people losing interest in the streaming service. Netflix cut off Russia after the invasion of Ukraine, and the company says that cost it 700,000 subscribers. Take that out of the equation and Netflix says the number of subscribers would have grown by half a million.
But the company predicted in January it would gain 2.5 million subscribers this quarter. It didn’t come close. And it warned it expects to lose 2 million in the current quarter.
The news cratered Netflix’s stock price. It’s currently down 35% on Wednesday.
An ad-supported option
One of the benefits of Netflix has been that watching comes without commercials. But co-CEO Reed Hastings raised the possibility of an ad-supported version with a lower subscription fee
“Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription,” Hastings said in a conference call on Tuesday. “But as much as I am a fan of that, I am a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense.”
This is an option many of its rival already offer, including Hulu and Paramount+. A version of Disney+ with commercials is on the way, too.
If Netflix joins them, it won’t be soon. It’ll take at least a year to launch an ad-supported version of Netflix, according to Hastings.