Netflix Long-Awaited Crackdown on Password Sharing to Commence This Summer in The U.S.

Streaming Media service company Netflix will commence its long-awaited crackdown on password sharing in the U.S. this summer.

The company is set to commence the password-sharing crackdown after it fell short of analysts’ expectations for the first quarter of the year. However, it reported higher-than-expected earnings of $2.88 per share in Q1, while analysts had predicted a $2.86 per share.

During the first quarter, in its quest to boost its revenue, Netflix planned to roll out its paid-sharing features in the U.S, the company now says it will start rolling out the change, an update designed to convert account sharers into paying users, on or before June 30, 2023. U.S. subscribers can now expect to see the paid sharing plans implemented in the coming weeks which will mandate users to pay another fee for others to use the same account.

Earlier this year the company kicked off its password sharing in various markets, which include Canada, New Zealand, Portugal, and Spain. Netflix notified account holders in these markets that if someone they do not live with uses their account, they will be alerted to buy an extra member. Netflix says it will allow up to two extra members per account, and its fee per extra user varies by country.

Following the rollout of the paid-sharing feature in the four countries above-mentioned, the company was however pleased with the results in the first quarter (Q1). It said in a statement, “In Q1, we launched paid sharing in four countries and are pleased with the results,” Netflix is quoted as saying in a shareholders call “We are planning on a broad rollout, including in the U.S., in Q2.”

Reports reveal that many Netflix subscribers have disclosed plans to cancel their subscriptions when the paid sharing plans are activated. This doesn’t come as a surprise, as Netflix is still hell-bent and confident moving forward with it’s paid-sharing plans. The company is ecstatic with how impressive this feature has been in Latin American countries last year.

The company said, “As with Latin America, we see a cancel reaction in each market when we announce [paid sharing plans], which impacts near-term member growth,” the company stated. “But as borrowers start to activate their own accounts and existing members add ‘extra member’ accounts, we see increased acquisition and revenue.”

Analysts predict that Netflix paid password sharing, and limiting the number of shared accounts could boost the streaming giant revenue by 3% and add an incremental $1.6 billion in global revenue annually. Also, wall street analysts are bullish on Netflix’s move to monetize password sharing as they suggest it would be a growth game changer, opining that the strategy cannibalizes full-ride member growth.