After announcing they’ve seen a fall in subscribers, Netflix has dropped further hints they are looking at cracking down on account sharing between friends and family.
The streaming giant released its first-quarter earnings for 2022 to shareholders on Tuesday, revealing that the number of users of the streaming service fell by 200,000 in the first three months of 2022. They could lose a further 2 million subscribers in the next quarter of 2022, according to their forecasts.
The bosses at Netflix believe there are a number of factors behind this trend. Firstly, the boom of streaming seen during the COVID-19 pandemic may have hazed their path ahead, leading them to overestimate their growth in 2021 and 2022. Secondly, they are faced with mounting competition from other big streaming platforms such as Disney Plus, YouTube, Amazon Prime Video, etc.
Thirdly, they are increasingly aware that password sharing may be eating into their growth.
By their counts, Netflix has around 222 million paying households, but these accounts are also being shared with over 100 million additional households, 30 million of which are in the US and Canada.
“We’re working on how to monetize sharing,” Reed Hastings, co-founder and co-chief executive officer of Netflix, said in a video of the Q1 2022 Earnings Interview. “You know, we’ve been thinking about that for a couple years. But you know, when we were growing fast, it wasn’t high priority to work on. And now we’re working super hard on it. Remember, these are over 100 million households that already are choosing to view Netflix. They love the service. We’ve just gotta get paid in some degree for them.”
Netflix has flirted with this idea of monetized account sharing before. In March 2022, they announced plans to roll out a trial in Chile, Costa Rica, and Peru that will charge account owners for sharing passwords with people who don’t live in the same household.
Technically, Netflix already prohibits password sharing beyond single households. In their terms and conditions, it reads: “The Netflix service and any content accessed through the service are for your personal and non-commercial use only and may not be shared with individuals beyond your household.” However, these rules are not tightly enforced
Just a couple of years ago, Netflix appeared unbothered by password sharing, arguing that it was part of what made online streaming services so attractive.
"We love people sharing Netflix," Hastings told the crowd at CES 2016. "That's a positive thing, not a negative thing."
Now their unfettered growth appears to have come to a close, those freeloading households could make all the difference.