MondayFounder

The battle against password sharing has reached American shores as Netflix makes a bold move to enforce its policies. In a recent email shared on their blog, the streaming giant informed its members that their accounts are meant to be shared exclusively within their own households.

With a firm yet empathetic tone, Netflix emphasized, “Your Netflix account is for you and the people you live with—your household.” The company believes in the value of personal subscriptions, creating an experience tailored to each unique household.

To accommodate those with external members who wish to enjoy Netflix independently, the email outlined two alternatives. First, users can transfer a profile of someone residing outside their household, allowing them to initiate their own paid membership. Alternatively, Netflix introduced an option to add individuals outside the household for an additional fee of $7.99 per month, fostering a sense of inclusivity while respecting the need for financial sustainability.

A visit to Netflix’s subscription plans page reveals that extra members can easily be incorporated into the standard and premium plans, guaranteeing an ad-free experience for everyone involved.

This move comes as no surprise, as Netflix had previously announced its intention to tighten the reins on password sharing to boost both revenue and subscriber numbers. The streaming service, once hailed for its exponential growth, had encountered stagnation in recent times, prompting the need for innovative measures.

Initially scheduled for implementation in the first quarter, Netflix postponed its crackdown, choosing to inform investors and customers during an earnings call last month that the changes would be rolled out in the second quarter instead. The streaming behemoth realized that more than 100 million households worldwide were sharing accounts, accounting for a substantial 43% of its global user base. This practice had inadvertently hindered Netflix’s ability to invest in fresh, captivating content.

Netflix had already introduced password-sharing guidelines earlier this year in four other countries: New Zealand, Canada, Portugal, and Spain. In these regions, members were encouraged to designate a “primary location” for their accounts while enjoying the option to establish two sub-accounts for individuals outside their home base—for a nominal fee, of course.

In contrast, the recent notice to U.S. households did not provide specific details similar to those in the aforementioned countries. Instead, Netflix offered two options: transferring a profile or adding an extra member for a fee. The company believed in tailoring its approach to suit the needs and preferences of its diverse American audience.

Although the implementation of such initiatives in the first quarter had initially impacted Netflix’s international subscriber growth, the streaming giant managed to secure an impressive 1.75 million customers during that period. Executives at Netflix revealed that Latin American markets experienced cancellations following the news, causing some short-term setbacks. However, those who had previously shared passwords eventually activated their own accounts, frequently adding existing members as “extra member” accounts. As a result, the company witnessed a surge in revenue.

Comparing this transition to the response to price increases, Netflix executives remained optimistic. They anticipated an initial resistance and subsequent cancellations, followed by a gradual return of subscribers who would eventually sign up for their personal accounts.

Beyond cracking down on password sharing, Netflix recently introduced a cheaper tier supported by ads in a strategic attempt to bolster revenue. These measures emerged as a direct response to the company’s first subscriber loss in over a decade during early 2022.

In the realm of streaming, media companies universally seek profitability by employing various strategies, including cost-cutting for content production, advertising integration, and innovative methods to attract a broader customer base to their platforms.

Joining the streaming industry’s transformation, Warner Bros. Discovery recently relaunched its streaming service as Max, combining the best of HBO Max and Discovery+. Paramount Global also announced its plans to launch Paramount+ and Showtime.