Netflix to begin US password-sharing crackdown in Q2

That could mean billions of dollars in wrangling in the 30 million homes in the United States and Canada that aren’t properly monetized.

The day has come for all of you profiteers. After months of setting up and testing deployment in other countries, netflixThe crackdown on password sharing is finally coming to the US and abroad in the coming weeks.

“In the first quarter, we launched Paid Sharing in four countries and were pleased with the results. We expect a broad rollout, including in the United States, in the second quarter,” Netflix said in its first quarter results for fiscal 2023.

The crackdown on password sharing, which has already taken effect in Canada, New Zealand, Spain and Portugal following a test in Latin America, works like this: account holders must set information about their primary location, as well as manage account access and devices, and you will only be able to share your password with other people in the same household. Anyone using this account outside of this household will need to ask the account owner to add it to their plan for an additional fee or upgrade to a new plan. If you’re traveling on vacation and watching Netflix on the go, you’ll be prompted to enter a verification code that only temporarily lasts for about a week.

Netflix started charging $7.99/month in Canadian dollars per person to add an additional account. If you switch and start your own account, Netflix also launched a feature last fall called “Profile Transfersso that people who have shared a password can still retain their viewing history and algorithmic data based on their viewing habits and not start from scratch.

Netflix said around this time last year that it estimated 100 million households weren’t being properly monetized (it reiterated that number in Today’s Earnings), or they were kidding a other account holder. From there, about 30 million of those users are in the United States and Canada, where subscriber growth has effectively leveled off for a while. This quarter, Netflix added 1.75 million subscribers worldwide.

Clamping down on password sharing could help Netflix finally break this trend nationwide and encourage people who have avoided paying for Netflix to sign up as new users or be added as additional users on the someone’s existing plan. For those who don’t want to pay full freight, some may choose to sign up for the cheapest Netflix pricing tier with ads. Last quarter when Basic With Ads launched, Netflix added 7.66 million subscribers worldwide.

The streamer also said that when news of the program broke, they immediately see a “cancellation reaction” in every market. But over time, Netflix says, these borrowers begin to activate their own accounts and others add additional members. This was especially true in Canada, where the streamer says the paid membership base is now higher than it was before the paid sharing plan rolled out, and subscriber growth there is growing faster than in the USA.

“With each launch, we learn more about how best to roll out these changes and what matters most to members, especially maintaining travel/on-the-go viewing and allowing people to better control access to their accounts as well as transfer profiles. to separate accounts,” Netflix said. “While this will shift some of the growth in memberships and revenue from the second quarter to the third quarter, we believe this will result in better results for our members and our business. Longer term, sharing paying will ensure a larger revenue base from which we can grow as we improve our service.”

Netflix also warned that in the short term engagement from places like Nielsen will likely “decline slightly” as people start canceling, but they predict this should improve over time.

Wall Street analysts are more excited than you that Netflix is ​​finally taking password sharing seriously, and that’s because they believe the new sign-ups resulting from the app could be worth it. over $3 billion domestically. Indeed, even if a third, or 10 million, of those users convert or are added as additional users, which several analysts say is a realistic and conservative estimate, it’s still a big change.

It could be even more lucrative internationally, where analysts say crackdowns on password sharing may not be as bumpy or lead to as many people being canceled outright as in the US, not least because Netflix is ​​even newer and expanding into other parts of the world.

Netflix’s Basic with Ads costs $6.99 per month; without ads it’s $9.99. Netflix’s Standard plan, which currently allows downloading and simultaneous use on two devices, is $15.49 per month, while the Premium tier which offers downloading on six devices and simultaneous use on four devices with enhanced sound and visuals, is $19.99.

Netflix Tuesday too announcement the end of its long-running DVD program, marking the end of an era of a company that started on the back of red envelopes shipping movies to your door. The last DVD mailer will be released on September 29th.

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