Netflix attempting to monetize multiple people using same membership (with a neat chart)

Netflix Tries to Monetize Password Sharing, But Will It Work?

As it looks for ways to boost revenue, the streaming platform is experimenting with adding a fee for account sharing outside households — a tack its rivals could take as well.


MARCH 23, 2022 5:00AM

Netflix is doing an about-face for its account-sharing subscribers — but not because the streamer is really that concerned about users being loose-lipped with their passwords.

On March 16, Netflix said it was testing a new feature in Chile, Costa Rica and Peru that would allow primary account holders to add up to two users outside their households for a small fee. Like past supposed crackdowns on password sharing, it’s not clear whether this new fee structure will ultimately be rolled out wide, but it does serve as another low-lift opportunity for Netflix — whose subscriber growth has stalled in recent quarters — to boost its revenue.

“I suspect that a crackdown will result in 5 percent subscriber growth, partially or fully offset by an increase in churn, and it won’t impact financials much, if at all,” Wedbush Securities analyst Michael Pachter tells The Hollywood Reporter. “I think they are doing this now because growth has stalled to a crawl.”

In March 2021, Netflix said it would start occasionally prompting users to verify their credentials to continue using their accounts, but the feature was given a limited rollout and didn’t become permanent — at least, not yet. Pachter notes the challenge of cracking down on password sharing. Streamers will notify subscribers when new devices are added, but it is “hard to differentiate” a new TV purchase from a friend borrowing a log-in.

All of the major streamers also state in their terms of use that accounts are meant to be used within households, but those rules are very loosely enforced, if at all. Apple TV+, which allots subscribers five profiles, currently allows for the most simultaneous streams at six, while Disney+ lets subscribers make up to seven different profiles on the same account and have four simultaneous streams.

But, according to Enders Analysis’ Tom Harrington, it may be difficult for other streamers to follow Netflix as easily in monetizing account sharing, even if it does seem inevitable. “Other streamers do not have this strength, with churn much higher and value more tenuous, but this is the direction of travel that they want, will and need to go,” Harrington notes.

Netflix’s supposed password crackdown has, naturally, led some users on social media to express concern about future measures meant to curb account sharing. Twitter users have even resurfaced a 2017 tweet from the main Netflix account saying that “love is sharing a password.”

“They have to balance the desire to eliminate piracy against the alienation of legitimate subscribers,” Pachter says. “My kids use my login at college, for example — totally legal, but a crackdown on that use would anger me.”

Still, Wall Street observers see the added account-sharing fee as an easy win for Netflix, given that few paying subscribers will unsubscribe because of the optional added fee. “Of, say, the 15 to 20 percent of users that are getting the service for free, some will subscribe or bolt on to the account they are currently leeching off. Few of the paying subs will unsubscribe, with their immediate value remaining the same,” explains Harrington. “A clampdown will be a net positive for Netflix.”

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