The Netflix password-sharing crackdown has officially begun in the United States.
Only people who live under the same roof can share accounts, the streaming company says. So you have two options: transfer your friends and family members mooching off your account to a new membership or share your Netflix account for an additional $8 monthly fee.
“Your Netflix account is for you and the people you live with – your household,” Netflix said in an email to U.S. subscribers.
The monthly fee is less expensive than the basic ad-free plan, which is $10 a month, but more than the ad-supported plan, which is $7 a month. Standard plans cost $15.49 a month and premium plans cost $20 a month.
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Netflix password-sharing rules
The popular streaming service used to encourage sharing Netflix credentials with friends and extended family. But it has changed its tune as subscriber growth slowed amid growing competition and a return to pre-pandemic viewing habits.
Now it’s looking to squeeze a few more bucks out of freeloaders.
“This is a way of getting folks who watch and enjoy Netflix to also contribute to the future of content,” Ted Sarandos, the co-CEO of Netflix, told the Toronto Star on April 6.
Cowen senior research analyst John Blackledge estimates that Netflix could pick up 2.1 million new U.S. subscribers from the initiative. Netflix accounted for 7.3% of total TV viewing in February 2023, according to Nielsen.
Moody’s Investors Service says the password-sharing initiative could cause “short-term subscriber discontent and disruption but presents the company with a material revenue growth and margin expansion opportunity.”
Wells Fargo Securities says paid password sharing could be a bigger earnings opportunity for Netflix than people signing up for its ad-supported subscription.
Will you pay for a Netflix account?
New Street Research says its survey of paying and nonpaying Netflix users found that more than half – 54% – would pay for their own subscription if their access was yanked, 70% would choose a subscription that is not supported by advertising and 37% would pay extra for people who don’t live in their household.”While only a small sample of the broader population of U.S. Netflix users, we think results bode well for traction of password restrictions,” New Street Research said.
Will you cancel Netflix?
There is some risk, however. Netflix lost more than 1 million users in Spain in the first three months of 2023 after cracking down on password sharing in February, according to market research group Kantar.
However, Netflix told investors that after a wave of cancellations, subscribers began adding “extra member” accounts. In Canada, the number of paying subscribers is now higher than before, the company said.
Why is Netflix cracking down on password sharing?
Forty percent of consumers in U.S. internet households share credentials or use shared credentials, up from 27% in 2019, a Parks Associates survey found in 2022.
Some 100 million people watch Netflix using someone else’s account, the company says.
Citi analyst Jason Bazinet estimated that streaming services lose about $25 billion a year. Netflix accounts for about 25% of that lost revenue.