Netflix Cracking Down on Sharing
4Netflix has taken a significant step in its efforts to combat password sharing by implementing a crackdown on the practice in the United States. The streaming giant has begun informing its members about a new sharing policy, emphasizing that Netflix accounts are meant to be used exclusively within a single household.
In an email shared on its blog, Netflix reminded subscribers that their accounts are intended for personal use and are only to be shared among the people residing in the same household. The company suggested two options for those wishing to share their account with someone outside their household. Firstly, members can transfer a profile to an individual outside their household, enabling that person to start a new membership paid for separately. Alternatively, they can opt to pay an additional fee of $7.99 per month for each person outside their household who uses their account.
Netflix's subscription plans page clarifies that extra members can be added to the standard and premium plans without ads, allowing for greater flexibility in account usage.
The move comes as Netflix aims to bolster its revenue and subscriber numbers, particularly after witnessing a slowdown in growth. The company had previously warned of stricter guidelines regarding password sharing and initially planned to implement the crackdown in the first quarter. However, during an earnings call last month, Netflix announced that the timeline had been pushed to the second quarter.
Netflix has estimated that over 100 million households worldwide share accounts, which accounts for approximately 43% of its global user base. This widespread practice has impacted the company's ability to invest in new content.
While Netflix has outlined password-sharing guidelines in other countries such as New Zealand, Canada, Portugal, and Spain, the specifics for U.S. households were not provided in the recent notice. Instead, the email presented the options of transferring a profile or paying an extra fee.
The company acknowledges that its initiatives in other countries have affected subscriber growth, with some cancellations reported. However, Netflix executives have observed that many former password borrowers eventually activate their own accounts and become "extra member" accounts, contributing to increased revenue.
Netflix's crackdown on password sharing aligns with its recent introduction of a cheaper, ad-supported tier aimed at boosting revenue. Both measures reflect the company's response to its first subscriber loss in over a decade earlier this year.
As streaming platforms strive for profitability, media companies are exploring various strategies, including cost-cutting measures, advertising, and finding innovative ways to attract and retain customers. The relaunch of Warner Bros. Discovery as Max and the upcoming availability of Paramount+ with the Showtime combined app are among the recent developments in the competitive streaming landscape.
In the face of these industry-wide changes, Netflix aims to optimize its revenue generation while ensuring fair usage of its platform, ultimately positioning itself for continued growth and success in the streaming market.
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