A recent report suggests that the popular streaming platform, Netflix, plans to crack down on password sharing in early 2023.
Netflix has been looking to monetize account sharing on its platform for a while.
Earlier in the year, the streaming platform started testing password sharing in a few Latin American countries — Chile, Peru, and Costa Rica. Netflix subscribers in those countries could add two extra members to their account for an additional monthly fee.
Recent news suggests that the experiment was a success.
Starting in 2023, Netflix intends to end account sharing on its platform. According to The Wall Street Journal, the streaming platform will ask people who share passwords outside of their household to pay for the additional accounts.
Netflix hasn’t announced how much it plans to charge for this service. However, users in the regions where the experiment occurred paid roughly $3 extra for adding new members. So the streaming platform could implement a similar payment plan in other countries.
Netflix will reportedly enforce the account-sharing rules through device IDs, IP addresses, and account activity.
Roughly 222 million paying subscribers share their passwords with an additional 100 million households. While Netflix has never encouraged multi-household password sharing, the streaming giant had looked the other way — until recently.
So what prompted the change?
How Password Sharing Impacts Netflix’s Revenue
Netflix is reportedly losing a bulk of potential revenue to password sharing.
According to Citi analyst Jason Bazinet, Netflix and other major streaming platforms lose roughly $25 billion in potential annual revenue due to password sharing. Bazinet further estimates that Netflix accounts for 25 percent of that number.
In other words, the streaming giant could lose as much as $6 billion in revenue to password sharing yearly.
Besides the annual revenue fall, Netflix reported its first subscriber loss in ten years. It makes sense that CEO Reed Hastings decided to crack down on account sharing.
The streaming platform wants individuals that rely on a shared password to signup for their account.
